Councils must raise £50m for greener homes scheme

9 Jun 09
Local authorities are to spearhead a £100m programme to build greener homes — providing they raise half the money themselves.

24th April 2009

By Neil Merrick

Local authorities are to spearhead a £100m programme to build greener homes — providing they raise half the money themselves.

Grants totalling £50m will be offered by the Homes and Communities Agency, with councils expected to fund the remainder through prudential borrowing.

The scheme to provide new energy efficient housing is part of a £500m package to kick-start the construction industry announced by Chancellor Alistair Darling. But there was no indication of when housing finance rules would be changed to encourage councils to build on a wider scale.

John Perry, policy adviser to the Chartered Institute of Housing, said he doubted whether the £100m would fund more than 1,000 homes — assuming councils could make the scheme stack up. ‘Unless the rules are changed quickly, local authorities don’t have the scope for that amount of prudential borrowing,’ he said.

Chris Leslie, director of the New Local Government Network, said it was clear the councils were seen by the government as being ‘close to the front line’ in reviving the housing market, but they needed further incentives to get directly involved in building. ‘The scale of investment needs to be far greater,’ he added.

The overall package was welcomed by the Home Builders Federation, which represents private firms. It promised to work with the government to identify mothballed sites where work could restart quickly.

But the National Housing Federation called on ministers to ensure that developers receiving assistance were required to provide extra social housing.

‘Taxpayers cannot simply bail out private businesses without getting anything back to help the wider community,’ said David Orr, chief executive of the NHF.

Other measures in the Budget included a £435m programme to make existing homes more energy efficient, although the CIH claimed that the chancellor had missed an opportunity to put housing at the heart of carbon reduction.

Housing for the armed forces is to receive a £50m upgrade and there will be an extra £80m for HomeBuy Direct, the latest shared equity scheme aimed at first-time buyers.

Ministers hope to boost lending by guaranteeing mortgage-backed securities, while the stamp duty ‘holiday’ for homes worth up to £175,000 has been extended to the end of 2009.

A £20m repossession prevention fund will enable local authorities to extend small loans to families at risk of homelessness through repossession or eviction.

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