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New borrowing powers will enable councils to build up to 10,000 affordable homes, Communities Secretary Eric Pickles and Chief Secretary to the Treasury Danny Alexander announced today.
From today, councils can bid for a share of £300m of extra borrowing, which will be made available through an increase in their housing revenue account borrowing cap, and invested in new affordable housing over two years from 2015.
Ministers also confirmed that the rules about council land sales would change, so more surplus and redundant land and property can be released to build homes for local communities.
Councils applying for extra borrowing powers will need to demonstrate maximum value for money, by including funds from disposal of surplus assets, particularly high-value vacant stock, and by bringing forward their own land for new affordable housing.
The government has untied councils' hands by reforming the system for council house finance. Councils can now keep their rents and receipts from house or land sales, in return for taking more responsibility for housing in their area.
Since 2010, 170,000 affordable homes have been delivered across the country, while councils have built more council housing in the last three years than in the previous 15 years combined. Today's move will allow councils to build on this progress and ensure local people have the affordable homes they need.
House building is vital for local economic growth, and councils will need to work closely with their Local Enterprise Partnership when preparing their bids for extra borrowing powers, which will form part of the government's Local Growth Fund.
Ministers also confirmed that councils will have more flexibility to sell their land for new development. Starting today, councils can now sell their vacant land at below market value to a broad range of organisations if it is then used to build affordable housing.
The extra funding and flexibilities will enable councils to complement government's affordable housing programme, which is on track to deliver 170,000 homes by 2015, and a further 165,000 between 2015 and 2018.
(CD)
