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Mayor: Government must scrap cap and let councils build new homes

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Mayor: Government must scrap cap and let councils build new homes

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Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Development, Local Government

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The coalition government must scrap rules that stop councils from building new housing, a mayor has claimed.

Commenting on the launch of a government review into council housebuilding, Mayor Sir Steve Bullock, executive member for housing at London Councils, told attendees at a Westminster event that government rules are holding back the construction of thousands of new homes.

“The artificial and unnecessary housing revenue account cap should be removed. Councils have already been using their extra capacity to create more homes for Londoners. But we want to build more,” said Bullock.

“If boroughs were able to borrow against their existing assets, this could, by 2021, release funds for an extra 14,000 homes in London.”

The housing revenue account cap is a Treasury rule which restricts councils borrowing against their assets to invest in new homes. Its removal is backed by the wider property and construction sector including businesses, councils, academics, professional bodies and housing charities.

Mayor Bullock also set out other ways in which government changes could lead to more homes, including:

• Supporting small building firms - 20 years ago around two thirds of housing was built by companies employing fewer than 500 people, compared to less than one third today.
• Introducing an ‘undeveloped land tax’ - with the aim of increasing supply, not raising revenue - would help incentivise developers to build.
• Allowing planning permission for developers to build, so long as the homes are rented – not sold – for the first 10-20 years. This encourages private sector renting and also stops speculation on the price of the land.

London Councils estimates the capital needs to build 800,000 homes by 2021. A recent poll found housing was the top issue for Londoners, with 82% believing the city is in the grip of a housing crisis.

Mayor Bullock added: “This is no longer an issue for housing professionals, this is affecting everyone: 82% of Londoners think we are in a housing crisis.

“There is no single solution. Housing affects health, education, social care and economic growth among many others. What Londoners want and need is leadership.”

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