Housing Minister Margaret Beckett's announcement of greater freedoms for local councils to build homes is likely to have only a limited effect on the numbers of affordable homes built until more fundamental reform of the funding of council housing is addressed according to the Chartered Institute of Housing (CIH).

The CIH welcomes the freedom for local authorities to keep rental income from any homes they build and those that are later sold through Right to Buy, but warns that until the system of council house funding, the Housing Revenue Account, is fundamentally reformed, the proposed changes will not deliver the scale of building needed.

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Richard Capie, CIH Director of Policy and Practice, said: "While we welcome measures to increase the provision of good quality affordable housing, councils will need access to additional forms of income in order to balance the cost of new build. The Government has announced plans to allow councils to bid for Social Housing Grant (SHG) and we await the details.

"This announcement is an important step in the right direction, but any significant progress will depend on the outcome of the overall review of council housing finance, which is expected later this year."

(CD/JM)