More than 300,000 new homes could be built, providing a £72.5 billion boost to the economy over ten years, through root and branch reform of the housing finance system, a new report published has revealed.

The Local Government Association (LGA), which represents more than 350 councils in England, has launched a major new housing campaign to give councils the freedom to build scores of new affordable homes and regenerate neighbourhoods across the country.

Demand for social housing is being fuelled by the recession. A survey of council leaders conducted by the LGA found that 57% of authorities are seeing more people in need of social housing and 31% expect to.

All the money councils collect in rent is currently transferred to central government coffers and either re-distributed to other parts of the country or spent on other projects. There is no guarantee the money is spent on housing. Analysis by the LGA has shown that if councils could retain this money they could, in just the current financial year, make 850,000 homes more energy efficient and save householders £160 on their energy bills.


Around £216 million of council tenant's rent will be retained by the Treasury in the current financial year - a figure that will rise to almost £1 billion by 2022/23. The LGA argues the building, repair and maintenance of council housing is being starved of cash. It wants the proceeds of tenants' rent to be retained locally and spent on improving housing for local people.

Up to 90,000 additional affordable homes could be built by councils over the next five years if the system was reformed. Over a 10 year period, the extra income from retaining tenants' rent would allow an extra 139,000 social houses to be built. If councils were also released from their historic debt and allowed to borrow against their assets this figure could rise to 309,000 - providing an enormous boost to the housing industry and the wider economy.

Cllr Margaret Eaton, Chairman of the LGA, said: "Entire neighbourhoods could be transformed if councils were able to keep the rent they collect and the proceeds of council house sales. Thousands of homes could be built, improved or made more energy efficient if central government stopped taking this money.

"As the recession starts to bite and more and more people struggle to find a roof over the heads, it is more important than ever to give town halls more powers over housing. Councils want to create places where people are proud to live. Allowing councils to spend the rent they collect and the proceeds from council house sales would be a huge boost to the economy."

(CD/JM)