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London boroughs call on chancellor to give councils more financial freedom to build homes
London’s boroughs have called on the chancellor to give councils more freedom to use their borrowing powers and to keep Right to Buy receipts to build more homes in the capital.
Cross-party group London Councils has written to the Treasury ahead of Wednesday’s Budget to encourage it to make policy changes for the capital’s local authorities.
It says these would help homeless people across London, a problem it says is driven by “a chronic lack of affordable housing”.
The government has estimated 72,000 new homes need to be built in the capital each year to meet demand.
London Councils said that boroughs are “determined” to build the homes that Londoners need, but lack the powers and resources to deliver housing at sufficient scale.
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It wants councils to be able to access the full income from Right to Buy sales to invest in replacement homes, and to benefit from a more favourable borrowing rate for investment in housing projects to accelerate the delivery of new homes.
London Councils estimates boroughs have lost £400m of income between 2013 and 2021 as a result of Right to Buy.
It also said increasing the Public Works Loan Board borrowing rate by one percentage point last year has added around £40m costs over four years to capital projects such as housing schemes, according to a survey of 13 boroughs.
It wants the government to introduce a separate borrowing rate for housing projects similar to the separate rate that is in place for infrastructure projects.
It also wants a 30-year commitment from the government to give councils the flexibility to increase rents locally by up to one percentage point over the consumer price index.
Councils that can demonstrate a “positive correlation between additional housebuilding and housing benefit reductions” should be able to raise rents beyond this, it said.
Peter John, chair of London Councils, said: “With 57,000 households living in temporary accommodation in London, including 88,000 children, there’s no denying that the capital is facing the most severe homelessness crisis in the country.
“If the government is serious about reducing homelessness, the chancellor will seize the opportunity in his first Budget to give boroughs full receipts from Right to Buy and the ability to borrow to invest in housing at low cost.”
He added that boosting “long-term, strategic investment now” would speed up work already being done across London to build the thousands of new homes.
In its submission to the Treasury, London Councils also asked the government to provide grant funding for “whole-building, holistic fire safety costs” resulting from failings in building and fire safety regulation, in order to support councils with remedial fire safety costs.
It also asked for clarification of responsibility for addressing safety in the private rented sector.
