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Review of borrowing cap would benefit affordable housing – research

Words: Laura Edgar
Affordable housing / Shutterstock_509223637

Efforts to deliver affordable housing would benefit from reconsideration of the borrowing cap for local authorities and the reintroduction of the Affordable Homes Guarantee Scheme, says the New Local Government Network (NLGN).

Increasing the borrowing cap is just one measure that would help give local authorities the autonomy to building housing where it is needed, according to a study commissioned by the National Housing Federation.

Working Together for More Homes notes that the renewed focus by the government on social housing, including an announcement by Prime Minister Theresa May of a £2 billion investment in affordable housing, “presents an opportunity for councils and local housing authorities to work more closely to help solve the housing crisis”.

It also acknowledges that in the face of reduced public spending, collaboration is now harder, but that any challenges can be overcome.

Adam Lent, director of the NLGN, said: “As the country faces the biggest housing crisis in a generation, local authorities are best placed to determine local demand in housing need and meet it.

“As such, the government should remove the barriers that prevent both housing associations and councils collaborating and innovating together.”

Working Together for More Homes follows a report by the Treasury committee in January, which concluded that raising the Housing Revenue Account cap would have no material impact on the national debt, but “could result in a substantial increase in the supply of housing, allowing local authorities to determine the level of additional housing needed in their area”.

The NLGN said its report identifies practical models that could capitalise on such a policy change.

Working Together for More Homes also recommends that:

  • Local leaders, such as elected mayors, should “more proactively” assemble and package up publicly owned sites in “bundles” for development across an area, with the view to driving quality development in areas that have traditionally suffered from low-quality housing.
  • The government continues to implement the proposed rent policy (and increase) of CPI + 1 per cent for social and affordable rents from 2020, as per the initial rent settlement, to allow housing associations and councils to invest in new homes with confidence.
  • The government provides a clear and sustainable funding solution for supported housing as a matter of urgency, with a supported housing allowance set at a higher level than the Local Housing Allowance, and sheltered accommodation removed from the proposed policy changes.

Working Together for More Homes: How Housing Associations and Local Authorities Can Tackle the Housing Crisis can be found on the New Local Government Network website (pdf).