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LGA calls for Government to lift housing cap

Removing the cap on the amount of funding that councils can borrow to invest in housing could allow 60,000 new homes to be built over the next five years, the LGA has stated.

The association is calling for a commitment in the next spending round to remove “unnecessary” restrictions on council investment. The Government cap, which bears no relation to the number of new homes needed in each area means councils can only borrow £2.8bn for housing.

Lifting the cap could allow ‘shovel-ready’ sites to be kickstarted, offering builders the financial security to start work on projects that have been afforded planning permission. It could also give a 0.6% boost to GDP and provide new jobs.

Cllr Mike Jones, chairman of the LGA's Environment and Housing Board, said: “Today's figures show that as a country we are still falling way short of the number of new homes we need to be building.

“Councils have excellent credit ratings and want to use our assets to help kick-start the housing recovery but our hands are being tied.

“At a time when housing waiting lists are rapidly expanding, levels of house building are languishing and the economy is still struggling, it makes no sense for Government to continue preventing local authorities from investing in the new homes the country badly needs.

“Councils, the markets and the construction industry all agree that the housing borrowing cap is unnecessary and only serves to hinder the housebuilding recovery.

“The Chancellor has an unrivalled opportunity to create jobs, provide more homes and help the economy without having to find a single extra penny. New homes are badly-needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its housebuilding block and let us get on with it.”

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