By Richard Johnstone | 22 August 2013
Councils in England have today warned that Treasury schemes to help people get mortgages risk creating a ‘housing bubble’ unless action is also taken to increase the number of homes.
The Local Government Association has published research that found there was a ‘backlog’ of 381,390 homes that councils have given planning permission for, but which developers have not yet built.
The analysis of council planning permission also found that little progress had been made in reducing this in the 2012/13 financial year, when it only fell by around 6,000.
In addition, the LGA highlighted that government figures show the number of planning applications submitted to authorities has fallen by 5% over the last year.
Mike Jones, chair of the LGA’s environment and housing board, said these factors mean government schemes to boost the housing market, such as the Help to Buy programme, ‘risk creating a bubble if there isn’t an increase house building to match it’.
He added: ‘The bumper backlog of unbuilt homes and drop in the number of planning applications submitted to councils last year is a worrying sign that the housing market is not yet on the road to long-term recovery.
‘While there has been progress made, this risks being undermined if we do not find a way to ensure developers keep up with demand.’
Jones said that councils are approving 9 in every 10 planning applications they receive, and he called on the government to take action to tackle the backlog of unbuilt houses with planning permission.
The ‘common sense answer’ is for the Treasury to remove the cap it has placed on council borrowing to pay for housebuilding, he said. The LGA believes that, if the cap on Housing Revenue Account borrowing was lifted, town halls could build an additional 60,000 new homes over five years, boosting economic output by 0.6%.
