Building new London homes is cheaper than providing temporary housing, says think tank

Out-Law News | 21 Dec 2011 | 4:37 pm |

A new report claims that it would be cheaper for the Government to build new homes than it is to put people in temporary accommodation in some London boroughs. The report predicts that councils could save £56 million by building new homes in London.

The New Local Government Network (NLGN) report urges the Government to look at alternative solutions to temporary housing ahead of the introduction of the housing benefit cap. It estimates that the cap on benefits could lead to 64,000 people in central London having to vacate their homes due to lack of affordability, leading to a need for more temporary housing.

Building a home in London is cheaper than providing temporary housing because councils pay for private rents at market level, which is far in excess of standard social rent levels. The cost of building new homes should be met by central Government, according to the report.

The NLGN estimates that if all people in the ten boroughs it analysed were to have a social house, rather than being in temporary accommodation, councils could save £56 million. The initiative would also help to stem the housing crisis, create jobs and boost economic development.

Councils would also be able to borrow against future rental stream under the Local Government Finance Bill, in line with the Localism Act. This would enable councils to build new social housing without being dependent on central Government, according to the report.