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Government ministers are being urged to allow councils to provide radical solutions for first-time buyers caught out by the credit crunch. It followed revelations by housing minister, Caroline Flint, that house-building had stalled, and ‘we can't know how bad it will get'. Local authority housing departments are facing increasing demands, due to a lack of affordable new homes and fewer private landlords, and are investigating solutions. One idea being floated in Whitehall is a return to the 1960s, when local authorities, such as the GLC, offered mortgages to first-time buyers to enable them to get on the property ladder. A Whitehall adviser, who has been monitoring the housing crisis, said: ‘We have a serious problem and are going to have to find radical solutions. Councils will have to pick up the pieces, and going back to providing mortgages could be an option. It comes down to whether the CLG and the Treasury will free councils up.' One public sector body is already doing this. The Post Office is offering a range of mortgages backed by the Bank of Ireland. CIPFA, which represents council finance chiefs, explained that several issues needed solving. A spokesman said: ‘It's an interesting idea and certainly possible, since councils have general economic powers. It would come down to political will and whether local people would want their councils involved in something which carries significant financial risk.' The LGA said council leaders were open to the idea but warned funding would be the critical issue. A spokesman said: ‘We would be happy to talk to the CLG but we'd have a whole host of questions – not least how the Government would provide the funding to pay for it.' One council praised for offering a radical solution is Barking and Dagenham LBC, which has created a pilot Local Housing Company which will offer up to 15,000 private, social and part-rent homes. Rob Whiteman, chief executive, said: ‘The company will be half-owned by the council, and half by private investment, but it is not a return to housing estates. We're trying to create a flexible model that gives us a pivotal role in delivering affordable homes.' Also, this week, the British Property Federation called on councils to use Section 106 agreements to develop a ‘corporate rented sector', so rental homes could be built by pension funds.

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ECONOMIC GROWTH

Town halls act over housing credit crisis

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