Housebuilding slump could be tackled by council investment, claims LGA
Published by Max Salsbury for 24dash.com in Housing and also in Development, Finance, Local Government
The Local Government Association (LGA) has claimed that the national housebuilding slump could be halted by a council-backed programme to build tens of thousands of new homes.
Council leaders are now urging chancellor George Osborne to help the construction industry in next month's spending round by removing "unnecessary" restrictions on council investment in new housing.
New government figures for the year's first quarter show that the number of completed new homes has continued to drop.
With 400,000 new homes already given planning permission and waiting to be built, the LGA claims that the main obstacles to development is a lack of financial security for builders.
The LGA, which speaks on behalf of more than 370 councils in England and Wales, says that thousands of 'shovel-ready' sites could be kick-started into action if the government-imposed block on council investment in housing was lifted.
Last year, research by a coalition of housing associations and the LGA found that councils could build up to 60,000 new homes over the next five years if they were allowed to invest in housing under normal borrowing guidelines.
According to the LGA, this would deliver a 0.6% boost to gross domestic product (GDP), create new jobs and reduce the benefit bill by increasing the provision of new social housing.
Councils have not been able to invest in new housing on such a scale since the early 1990s.
Cllr Mike Jones, chairman of the LGA's environment and housing board, said: "Councils have excellent credit ratings and want to use our assets to help kick-start the housing recovery but our hands are being tied.
"At a time when housing waiting lists are rapidly expanding, levels of housebuilding are languishing and the economy is still struggling, it makes no sense for government to continue preventing local authorities from investing in the new homes the country badly needs.
"Councils, the markets and the construction industry all agree that the housing borrowing cap is unnecessary and only serves to hinder the housebuilding recovery.
"The chancellor has an unrivalled opportunity to create jobs, provide more homes and help the economy without having to find a single extra penny. New homes are badly-needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its housebuilding block and let us get on with it."