Call for councils to offer mortgages

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Local authorities should offer mortgages to help kickstart the flagging housing market, according to a new report.

With repossession levels at their highest since the early 1990s and many households struggling with mortgage payments, the New Local Government Network study says councils are ideally positioned to help stabilise the housing market.

The report, published at the weekend, says that councils should adopt US style mortgage support plans, under which town halls would offer market rate or below market rate mortgages.

NLGN report author Anthony Brand said: "Government should set £2bn of its £50bn intervention package aside for supporting these measures, and allowing the hardest hit councils to apply for funding. This could help up to 15,000 people out of difficulty and even provide a long-term profit to the Treasury."

The report also calls for councils to be given powers to restrict the amount of right-to-buy properties in areas of high housing demand to maintain levels of social housing.

Mr Brand claimed that since its inception in the 1980s, right-to-buy has lead to the sale of over 2m public sector houses and that this has in part led to a shortage of social housing and 1.6m households on the housing waiting list.

The report also argued that the current £26,000 discount of Right-to-Buy properties should be removed as it offers an unfair advantage to buying.