Key points:- Local authorities could take on £10bn-£15bn in additional debt to build up to 100,000 more homes- At least 15,000 more council homes could be built each year in England- More detail in ‘Raising the Roof’ report by Savills for ARCH and NFA (see link below)
Responding to the announcement by the prime minister that the borrowing cap on local authorities with housing revenue accounts (HRA) will be abolished,
Steve Partridge, a Director at Savills Housing Consultancy, said:
‘First and foremost, this is excellent news and should be welcomed positively throughout the social housing sector.
‘Subject to the detail of the announcement and the precise timing and arrangements to be put in place, this could offer a great opportunity to add significantly to the number of new homes provided by councils.
‘With the complete abolition of debt caps, and through sensible and prudent long-term planning, we estimate that authorities could release between £10bn-£15bn of extra borrowing capacity, capable of delivering a total of around 100,000 new homes.’
On the potential for increased borrowing by local authorities within the existing local government Prudential Code, Steve said:
‘Last year, we helped the Association of retained Council Housing (ARCH) and the National Federation of Arm’s-length Management Organisations (NFA) prepare a case for increasing debt caps [see link below in notes to editors]. At that time, we estimated that English local authorities could release capacity for up to 15,000 new homes immediately if they were allowed to manage their caps locally.
‘The appetite from authorities in putting forward their recent bids for extra borrowing headroom in the existing system has clearly shown the extensive ambitions of councils to make a big contribution to the delivery of new affordable homes.
‘The programme goes to show that the fewer the strings, and the better the opportunity to plan properly, the more homes will be built. As more homes are built, this builds further capacity.’