Government sets date to lift borrowing cap

The Government has revealed plans to axe the cap on councils borrowing against assets to build new homes by the end of this month (October).

A draft document sent to council chief executives states the Government is looking to remove the cap on 30 October.

The abolition of the cap was announced earlier this month by the prime minister, Theresa May at the Conservative Party annual conference in Birmingham.

‘We intend to remove the borrowing cap by issuing a determination revoking previous determinations that specified a local authority’s limits on indebtedness,’ writes the Housing Secretary, James Brokenshire in an accompanying letter.

‘We must consult local authorities, representative of local government, and relevant professional bodies before issuing this determination. Accordingly, I attach a draft of the determination that we are intending to make.’

The Government has asked for all responses to be sent to ministers by 24 October.

There have been repeated calls from various organisations, including the Local Government Association to lift the borrowing cap for councils.

Responding to the announcement earlier this month, CIH director of policy and external affairs Gavin Smart said: ‘We have been calling on the Government to lift the local authority borrowing cap to help councils build more genuinely affordable homes so it’s great to see the Prime Minister listening to the voice of housing professionals.

‘If we are to have any hope of tackling our national housing crisis, councils must play a critical role and this move will help them reach their potential. But if course it’s not just a numbers game – we need to make sure we are building the right homes, in the right places, at the right prices. That’s why it is so important to give councils the tools they need to build more truly affordable homes for social rent.’