The mechanisms would be designed to encourage city investors, insurers and pension funds to provide cash to fund affordable housing schemes.
The Government has reportedly said that it fears that current levels of building will not meet the increasing demand for properties. Ministers have admitted that as targets for house building in the UK have not been met for decades, the country is significantly short of affordable homes. This problem is at its worst in London and the south east of England, where home ownership is not a viable option for many people.
According to the Guardian report, chief secretary to the Treasury Danny Alexander and Communities Secretary Eric Pickles are "keen to see whether the 89 local government pension schemes, which together own £148 billion of assets, could act collectively and use their cash to provide significant investments in housing in England and Wales".
Keith House, Liberal Democrat leader of Eastleigh council, told the Guardian that "local government pension funds are risk adverse. Our task is to shine a light on this area and identify barriers to investment". The review will also consider whether selling off the most expensive council properties once they are vacant could be a feasible way to pay for more homes.
House has just started a company to build 200 homes on the south coast and along with Natalie Elphicke, the wife of a Tory MP who founded the housing charity Million Homes, Million Lives, will chair the review.
The Government's affordable rent scheme will see housing associations and councils offer rented homes to social tenants at a maximum of 80% of market rent rather than the 30% offered by traditional council housing. Accompanying changes to the way tenancies are offered will allow housing providers to offer more flexible leases, some as short as two years.
Alexander said that the amount of social stock fell by 420,000 from 1997 to 2010 and as a result claims that the coalition are "determined to do even more to support affordable and good quality housing in the UK".
