Westminster City Council has released a new policy paper looking at the challenges faced by the housing market and putting forward three simple proposals that could free local authorities to help solve national housing shortages, while giving the economy a much needed boost.
The paper – entitled, ‘Building an economic recovery’ – was written in conjunction with the Home Builders Federation, and proposes:
- Localising an element of Stamp Duty – The new £2 million threshold for Stamp Duty Land Tax will be worth £300 million per year to the Treasury by 2015. Westminster argues that ring-fencing just a small proportion of these receipts for spending on local affordable housing programmes could help local authorities mitigate the effect of many long-term residents being priced out of the local market, whilst building up to 2,250 new homes for rent or affordable ownership each year and supporting more than 3,000 jobs. This would give authorities the opportunity to help maintain strong, mixed communities without resorting to introducing a mansion tax.
- More freedom in the Housing Revenue Account system – Westminster believes that the recent reform of the Housing Revenue Account (HRA) does not sufficiently align investment need with borrowing capacity, meaning that many councils will be unable to fulfil their own development potential. The creation of a marketplace for HRA headroom, so that councils can trade capacity, would help to match need with capacity and maximise the number of new homes built but will not increase overall public borrowing, argues Westminster.
- More creative use of public money to improve the viability of sites – Instead of providing up-front grants for affordable housing, public investments could be used to unlock sites that have infrastructure requirements and/or be made on the basis of an equity share in the development, repaid by the developer using the proceeds from sales and share of any ‘super-profits’, Westminster claims.
Cllr Jonathan Glanz, Westminster’s cabinet member for housing, said, “On their own, the ideas put forward in this paper will not solve the housing crisis but they would allow local government to use its skills and resources to help deliver the homes this country needs and play a greater role in supporting an economic recovery.”
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