Headlines: March 13th, 2009

Almost nine out of ten councils are experiencing or anticipate an increase in demand for social housing because of the recession, new research published today has revealed.

A survey of council leaders conducted by the Local Government Association, which represents councils in England, shows that 57 per cent of authorities are seeing more people in need of social housing and 31 per cent expect to.

A perfect storm of a range of different factors is placing pressure on the countrys council housing. There has been a significant rise in demand for council housing because of repossessions, a sharp fall in mortgage lending and house prices that remain out of reach for many people on an average salary. At the same time the supply of affordable housing has dried up.

The LGA has set out a series of proposals to unblock the housing market and increase the supply of affordable housing to plug the council house waiting list. Councils should be allowed to keep all the rent from council housing and right-to-buy to invest in new stock. The Treasury holds on to £300 million of money that council tenants pay to councils in rent. Councils should be able to borrow on the open market in the same way that Housing associations have the freedom to do so. A £1.5bn fund is needed to help around 60,000 first time buyers onto the property ladder to kickstart the housing market.

Councils should also be given the powers to embark on a major new programme of council house building and improvements. There should also be extra public investment in infrastructure projects to pave the way for private development.

Cllr Margaret Eaton, Chairman of the LGA, said: This survey of council leaders shows the deeply worrying impact the recession is having on the housing market. Families have yet to see the governments bail-out to banks filter down to create lower borrowing rates for potential homeowners, and it will be councils that have to pick up the pieces as people end up on social housing waiting lists.

Councils saw increased pressure on their social housing waiting lists even when the economic good times were rolling. Now as the recession starts to bite it appears thousands more people will be looking to their council to provide them with a permanent home.

Councils want to provide decent homes for those who cannot afford to rent in the private sector or buy their first home, but they have been hamstrung by a lack of freedom to do so. Allowing local authorities to borrow on the open market and keep the rent from their tenants and right-to-buy schemes, would unlock the resources to allow them to embark on a major new programme of council house building.

Social housing has to be a top priority because the harsh reality is that fewer people are getting onto the property ladder.