Councils must be free to borrow more to build new residential properties

Councils must be free to borrow more to build new residential properties

Councils must be free to borrow more
to build new residential properties

The Government must allow Local Authorities to borrow more money to spend on building so they can tackle housing shortages and build 60,000 extra residential properties in five years, according to the Local Government Association

The Local Government Association (LGA) said that the nine councils listed below were unable to take on any loans at all, even though they have over 40,000 people on accommodation waiting lists.

  • Darlington Borough Council
  • Dudley Borough Council
  • Exeter City Council
  • Gosport Borough Council
  • Harrow Council
  • Royal Borough Greenwich Council
  • South Cambridgeshire District Council
  • Waverley Borough Council
  • Woking Borough Council

The LGA said lifting a cap on local authority borrowing would allow up to 60,000 new residential properties to be built in the next five years.However, the government hit back with Housing Minister Kris Hopkins saying: “As a lobbying organisation, the LGA need to realise that there is no magic money tree, and this government needs to cut public borrowing to keep interest rates down and ensure long-term economic growth. But under this government, the housing market has turned the corner, with house building now at its highest level since 2007, backed by up £19.5bn of public and private investment in affordable housing over the current spending review. The government will outline its broader approach in the Autumn Statement.”

The Treasury capped the amount councils could borrow against ring-fenced housing budgets in 2012, set at different levels for each area. However, the LGA urged Chancellor George Osborne to use tomorrows Autumn Statement to lift the provision.

The LGA think that Mr Osborne should allow councils “to invest in housing under normal responsible borrowing guidelines, as the investment would be very low-risk and paid many times over by future rents on new homes”.

Mike Jones, chairman of the LGA’s environment and housing board, said: “There are millions of people on social housing waiting lists and councils want to get on with the job of building the new homes that people in their areas desperately need. Local authorities have excellent credit ratings and we want to use our assets to help kick-start the housing recovery, but our hands are being tied. The chancellor has an unrivalled opportunity to use this Autumn Statement to create jobs, provide tens of thousands of 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 house building block and let us get on with it.”

Property Investors are poised to cash in on the property shortages in the 9 local authority regions listed above as while the politicians keep arguing amongst themselves, nothing will happen, so there is plenty of room for portfolio landlords and investors to operate a thriving rental property business in those identified areas due to unprecedented tenant demand.

Source:BBC

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