Prime Minister Theresa May has lifted the Housing Revenue Account cap, meaning local councils can borrow against their assets to fund new developments.

Scape Group chief executive Mark Robinson has labelled the announcement "a huge turning point in the delivery of new homes".

He said: "Finance has always acted as a key barrier to local councils ability to make a difference to housing output, and now, with the right resources and powers, they can serve as high powered engines for housebuilding in communities across the whole of the UK.

"However, there is more to be done. To meet housing demand we need a revolution in housebuilding and this means thinking more innovatively about the method and speed in which we are able to deliver high-quality new homes.

"We need more housing right now – the country cannot wait. Greater use of modular and offsite housing solutions will be an essential part of improving the speed of delivery. The government must consider ways of amending the planning system to make it easier to build modular developments."

Brian Berry, Chief Executive of the FMB, also welcomed the PM's announcement.

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He said: "This is the most exciting, and potentially transformative, announcement on council housing for many years. It is something the house building sector and local authorities have been crying out for since the last economic downturn as a means by which to increase house building. Indeed, the only times the UK has built sufficient numbers of homes overall is when we’ve had a thriving council house building programme. Local authorities have a strong interest in delivering new affordable homes and many would have the appetite to directly fund this, but have been frustrated from doing so by an artificial cap on their ability to borrow against their assets to build homes. In a victory for common sense, Mrs May has now signalled that the borrowing cap will be scrapped to allow councils to build many more new homes.

"We believe this could also have the added benefit of expanding the capacity of the private sector by providing more opportunities for SME builders. In this way, a stronger public sector house building programme can complement and help support a stronger, more diverse private sector. The private sector will continue to take the lead in delivering new homes, and to ensure it can do so, we need to continue to lay the foundations for a diverse private sector in which new firms can more easily enter the market and small firms can more easily prosper and grow. However, in order to deliver the number of new homes the Government is targeting it is going to be necessary for the private and public sectors to both be firing on all cylinders. That's why this announcement is so welcome."

He added: "However, as much as this is a bold and praiseworthy move by the Prime Minister, new homes of any sort will not get built if we as an industry don't have the people we need to build them. Recent announcements on post-Brexit immigration rules, if implemented as currently understood, will be a serious threat to our ability to deliver on the promise of this policy. The failure of the Government so far to listen to the construction industry could unfortunately threaten the delivery of the Government’s increasingly bold moves to solve the housing crisis."

(CM/MH)