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Labour would end housing borrowing cap for best-placed authorities

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A future Labour government would lift the cap on borrowing for house-building for councils that “present a strong business case and investment plan”.

The announcement has been made in a joint letter to local authority leaders from shadow communities and local government secretary Hilary Benn, shadow housing minister Emma Reynolds, and shadow planning minister Roberta Blackman Woods.

The proposal was put forward in the recently-published Lyons housing review which outlined how to build 200,000 new homes every year by 2020. The Labour-commissioned report, Mobilising across the nation to build the homes our children need, said the Treasury would be able to ensure that the additional flexibility did not see an increase in total borrowing over and above that currently planned for.

The letter from the Labour MPs said councils would be provided with powers to fine house-builders that did not develop land after gaining planning permission to do so. It added: “In the most serious cases we will give councils a ‘use it or lose it’ power, with a streamlined CPO [compulsory purchase order] process, so the site can be bought and sold on to someone who will build.”

Councils will also be given powers to enter into partnerships with developers to build homes. As a result they will be able to “reserve a proportion of the homes built on this land, for example 50 per cent, for first-time buyers from the area to have first call on for a period of two months”. The letter added that councils would be able to “restrict the sale of homes in these areas so they cannot be sold for buy-to-let or buy-to-leave-empty properties”.

Labour said housing would be “a top priority for capital expenditure” if it formed the next government and added it would “ensure better use of existing resources, such as a move to single-pot funding and refocusing public expenditure from benefits payments to house building over time: so-called ‘benefits to bricks’.”

The Lyons review said the amount of genuinely affordable homes had been in long-term decline, “leaving the private rented sector as the only option for many in need”, which in turn had resulted in more people claiming housing benefit due to rising rents.

The report said: “The argument is that we should begin to shift the balance back towards investment and away from benefits. While recognising that the move will take time to achieve, this call is strongly supported by the review. Without such reform, supply-and-demand-side measures can only ever treat the symptoms of the housing crisis – providing a small shot in the arm without curing an increasingly sickly beast.”

The letter also said all local authorities would be expected to draw up a local plan.

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