Figures reveal there are still not enough houses being built. Time to let local councils take control?

kamsandhu —  August 20, 2013 — 1 Comment

Figures released last week show that there are still not enough affordable houses being built to cope with demand. The number of houses failed to reach even half the required estimate of 250,000 a year, and the figures were down on the same quarter last year.

There are currently around 1.7million households on waiting lists for social housing in the UK, and this number will only increase as the government fails to bolster the speed and amount of housing on offer. At the same time, house prices continue to rise and are pushed further and further out of reach for many people, and for those that are renting or have a mortgage, increased rates have resulted in many falling into arrears and sometimes becoming homeless.

Photo: www.theguardian.co.ukImage: The Guardian

This is a crisis created by a failure of successive governments to build new affordable housing in keeping with demand. Despite recent schemes designed to ‘help’ stimulate the market, such as the ‘help to buy’ scheme, the plans do not solve the housing crisis in the long term, and could in fact create a further housing bubble leaving future populations even more unable to get on the ladder, or able to pay rent.

The Chief Economist at the Institute of Directors, attacked the scheme last week, saying:

“The housing market needs help to supply, not help to buy and the extension of this scheme is very dangerous.

“Government guarantees will not increase the supply of homes, but they will drive up prices at a time when it seems likely that house prices are already over-valued.”

The schemes are but another plaster over a gaping wound and cannot replace the need to build.

Moreover, a huge investment in building will stimulate the economy, provide jobs and future revenue from rents. There is really no reason for the government to not build houses, unless they want to retain the current market allowing only the rich to afford their own homes.

One step towards the solution would be to remove the housing investment cap placed by government on local councils, restricting their ability to help with a recovery.

The Local Government Association said in a press release last week  “councils could quadruple to 60,000 the number of new homes built over five years if the housing borrowing cap was removed. Under the current rules, councils would be able to borrow no more than £2.8 billion to invest in housing – enough to build 15,000 homes. Without the cap, councils could borrow up to £7 billion to invest in housing over five years, under existing Prudential Borrowing rules.”

The LGA represents over 370 councils in England and Wales and is now calling on the government to remove the cap. We hope they do.

by Kam Sandhu @KamBass
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  1. The Labour Party Conference: What will Labour do for welfare? « - September 24, 2013

    […] current rate of building has been increased, but is still not enough to cater for the 250,000 extra homes we need each year. The ‘bedroom tax,’ which was supposedly meant to free up larger houses to help the 2 […]

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