Scrapping borrowing limit can help Council to build more homes

Changes to the rules around how much money councils can borrow to build affordable homes have come into effect this week.

A cap, introduced by the Government in 2012, restricted the amount that local authorities were able to borrow against the social housing they own, known as their Housing Revenue Account (HRA).

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That cap has now been scrapped so councils will be able to choose to borrow more funds to build more affordable homes. Despite the old cap, Cornwall Council has already been proactive about meeting the demand for affordable housing and has a target of building 1,000 homes for people with a local connection to Cornwall.  

Cornwall Council cabinet portfolio holder for homes Andrew Mitchell said: “The shortage of homes is one of the most pressing issues we face and that is why it is a priority for this Council.  With over 17,000 people on the Cornwall Homechoice Register who want to bid for affordable housing to rent, it is clear that only an increase of all types of housing – including those for affordable or social rent – will help address this need.

We were one of the ambitious councils that bid for more funds to build more homes and it was the popularity of that bidding process amongst local authorities that has led to the lifting of the cap.  

This move will give council’s the freedom to use their HRA and funding as they see fit.  We don’t yet know exactly what that means for housebuilding in Cornwall because, as always, the devil is in the detail, but it should make it easier to access funds. We are already committed to building 1,000 homes for people with a local connection and we’ll be looking at how these new financing rules will work to help us achieve that target.”

The council has already been able to build some homes within the HRA in spite of the old cap.  This includes 23 new council homes in Goonhavern near Truro built by Cornwall Council last year and let to families and couples with a local connection to the area.  There have also been new affordable homes bought through the HRA on new developments specifically to be let as council housing.  This includes homes at Porthpean Road near St Austell, Lantoom Meadows in Dobwalls, and additional social rented homes on the St. Clare site in Penzance, which are currently under construction.

 

Story posted 02 November 2018