Cut the borrowing cap to help councils build thousands of new homes
Yes, yes, yes – great article this – lets push on with it. It tells us (all in the context of London but deeply applicable to deep rural places):
Removing the housing revenue account borrowing cap would allow councils to borrow against their housing stock and build homes themselves. This could allow an extra £2.5bn borrowing capacity to be released, enabling councils in London to build an extra 13,900 homes by 2021.
Introducing an undeveloped land tax could help to reduce land banking and encourage housebuilders to start work on the 124,247 homes with planning permission in London but which have not been built.
But perhaps the biggest prize is to move from a system of personal housing subsidy, through housing benefit, to investing in bricks and mortar. Over the past 10 years £50bn has been spent on housing benefit in London, more than three times the £17bn of capital investment in building new homes and improving existing ones.
The Institute of Public Policy Research wrote about this in detail last year, but one way to achieve it would be for government to develop an earn-back deal that would give local authorities a share of the savings made from reducing the overall housing benefit bill to be recycled into building more homes at lower rents.
The housing shortage is the biggest single issue facing our city. If we do not find solutions to it we risk London’s future. Politicians of all parties need to work together and be willing to thing differently, think fast and think big.