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May announces end to council borrowing cap

The prime minster has announced an end to the housing borrowing cap for councils.

Speaking at the Conservative party conference today, Theresa May said that “Solving the housing crisis is the biggest domestic policy challenge of our generation.”

May then went on to say that the cap on how much councils can borrow against their housing revenue account assets in order to build houses “doesn’t make sense,” before adding: “today I can announce that we are scrapping that cap.”

Originally applied in 2012 when George Osborne was chancellor of the exchequer, lifting the cap has been a Labour and Lib Dem policy for some time, with Lib Dem leader Vince Cable being especially outspoken about the issue.

Coreco director Andrew Montlake says: “This is a good thing – councils need more opportunities to build the homes needed in their areas at the right prices.

“[Minister of state for housing] Kit Malthouse gave a speech yesterday which hinted at this, and it went down very well in the room… at this point in time, with the housing market in the state that it’s in, all ideas are on the table, and it would be nice to see some cross-party support for a long-term plan.”

British Property Federation chief executive Melanie Leech adds: “Lifting the council borrowing cap is something our industry has called for over many years and should enable local authorities to invest in their communities’ economic and social wellbeing.

“We urge local authorities to take advantage of this, to support new housing delivery and provide a significant boost to the social housing sector.”

At the start of the month Theresa May detailed plans for a new tax on foreign property buyers, the proceeds of which will be spent on dealing with homelessness.

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