Government must drop housing cap to support rising London population, businesses say

London’s housing supplies are not equipped to deal with a rapidly rising population, and demand cannot be met while council borrowing is capped, businesses in the capital have today warned.

The London Chamber of Commerce and Industry (LCCI) has recently called on central government to lift the Housing Revenue Account Borrowing cap in order to allow councils to begin offering more affordable homes.

Housing in the capital is reaching a crisis point, with the average home reaching costs of as much as 12 times the average salary, whilst the population is expected to hit 10 million by 2030.

In addition, a recent poll conducted by ComRes showed roughly half (48%) of 1,000 businesses surveyed in the city felt affordability and availability of housing was central to retaining employees.

Chief executive of LCCI, Colin Stanbridge, commented: “Rising housing costs and the lack of affordable homes, either to rent or to own, within commutable distances of workplaces is generating pressure on employers to increase wages, leads to limited employee productivity and can often create challenges in recruiting and retaining staff.

“Local councils should be empowered to build more local homes in their local areas. Removing their inability to borrow sufficiently to invest in housing could ease the pressure on our growing city.”

In September, the LGA denounced home ownership as an “unrealistic dream” based on the ever-increasing house prices in the UK and the struggle to build at necessary speeds.

New housing projects are often limited by space and availability, but recently a lack of available funds has also slowed the construction process.

Earlier this month, Theresa May announced an additional £2bn of affordable housing funding for authorities. However, the London population is increasing at such pace that the LCCI feels borrowing is the only way to keep with demand.

Top image: Duncan Andison

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