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Lifting of housing borrowing cap is warmly welcomed

Words: Martin Read

A very welcome decision and a victory for both bold thinking and common sense are some of the responses to the government’s decision to scrap the cap on local councils borrowing against assets to build housing.

For the RTPI’s part, Tom Kenny, policy officer, said that enabling local authorities to be key players in the housing market is vital to tackling the housing crisis. 

“The prime minister’s move to scrap the HRA borrowing cap is warmly welcomed and needs to be rolled out immediately – our members have been calling out for this for some time.

“We also need to give councils more powers to assemble sites with the infrastructure needed to support them, with land at the right price to build more homes, quicker, either themselves or via a diverse set of housebuilders including housing associations, self-builders and SMEs.”

At the National Housing Federation, executive director of public impact Ruth Davison explained that everyone who builds affordable homes – both councils and housing associations – “have argued this cap on council borrowing puts the brakes on building more homes”.

“We are so far off building the number of homes we need that councils and housing associations must be able to do more if we are going to solve the housing crisis.

“This announcement will allow housing associations to work more effectively in partnership with councils, pooling their resources and maximising their impact.”

Brian Berry, chief executive of the Federation of Master Builders (FMB), described the decision as “the most exciting and potentially transformative announcement on council housing for many years” – and one that could specifically benefit small builders.

“The only times the UK has built sufficient numbers of homes overall is when we’ve had a thriving council housebuilding programme. Local authorities have a strong interest in delivering new affordable homes and many would have the appetite to directly fund this, but have been frustrated from doing so by an artificial cap on their ability to borrow against their assets to build homes. 

“We believe this could also have the added benefit of expanding the capacity of the private sector by providing more opportunities for SME builders. In this way, a stronger public sector housebuilding programme can complement and help support a stronger, more diverse private sector.” 

Berry did, however, warn that lack of skilled labour could remain an obstacle.

“New homes of any sort will not get built if we as an industry don’t have the people we need to build them.

“Recent announcements on post-Brexit immigration rules, if implemented as currently understood, will be a serious threat to our ability to deliver on the promise of this policy. The failure of the government so far to listen to the construction industry could unfortunately threaten the delivery of the government’s increasingly bold moves to solve the housing crisis.”

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