Councils warn on housing shortage

The economic slowdown and the credit crunch could combine to massively increase the demand for social housing, councils have warned.

 

Local Government Association (LGA) projections suggest that up to five million people could be on the council housing waiting list within two years.

 

Almost half of councils say they are already unable to cope with increasing demand.

 

High house prices, fewer mortgages and increased repossessions are combining to accelerate demand still further.

 

The LGA is now calling for councils to be able to be given greater freedoms to increase their housing stock by being able to borrow freely and remortgage assets to reinvest.

 

Paul Bettison, chairman of the LGA's environment board, said social housing had to be "a top priority" because fewer people were getting on the property ladder.

 

He said: "With the banks overstretching their credit facilities it could well mean that in the coming months that councils will have to help pick up the pieces as people end up on social housing waiting lists.

 

"The days of excessive lending and risk-taking which led to this credit crunch may be over, but consumers have yet to see the government's £50bn bail-out to cash-strapped banks filter down to mean lower borrowing rates for potential homeowners.

 

"Even when the economic good times were rolling, councils saw ever increased pressure on their social housing stock.

 

"Now that the credit crunch is upon the country it appears that many thousands more people will be looking to councils to provide them with a permanent home as they either find it impossible to get on the housing ladder or see their home repossessed."

 

Liberal Democrat housing spokesman Lembit Opik said: "Ministers should feel ashamed for presiding over a doubling in the social housing waiting list since Labour came to power.

 

"We're now looking at the possibility of tens of thousands of families facing repossession this year alone, but with fewer social homes available than during the last housing market crash."

 

Responding to the report, housing minister Caroline Flint said: "The demand for more housing, including social homes, isn't new.

 

"We welcome the LGA's backing for government investment to provide 70,000 affordable homes a year by 2011, including 45,000 social homes for rent.

 

"I hope they will be instrumental in persuading their member local authorities to support plans for increased housing supply to meet the needs of local families on housing waiting lists."