Council rent 'can fund new homes'

Ministers have pledged to build three million new homes by 2020

Councils in England could build 90,000 extra affordable homes in the next five years if they were able to keep all the rental income from their housing stock.

That is the claim from the Local Government Association ahead of a major housing conference on Tuesday.

The LGA wants the government to scrap the system which channels all rent into a national pot for redistribution.

Housing Minister John Healey told the BBC he was well-disposed to the idea of councils keeping more of their income.

Mr Healey is due to make his first speech as minister at the Chartered Institute of Housing conference in Harrogate, North Yorkshire.

Tough target

The LGA predicts that by 2011 there will be five million people in England on housing waiting lists.

But rental income from tenants and proceeds from right-to-buy sales could help meet some of the demand, it says.

The government has pledged to build three million new homes by 2020, but the slow-down in the construction sector due to the recession has put that target in jeopardy.

Ministers say they are working to get an extra 12,500 affordable homes ready within two years, investing £160m to buy almost 5,000 unsold homes, and spending a further £550m to build 7,500 new properties.

But Barry Macleod-Cullinane, Harrow Council's portfolio holder for adults and housing, said he believed the system cost the local authority £6m to £7m each year.

He said: "Taking into account this very tough economic climate, we have been urging the government to scrap this outdated system and allow local authorities and local people a real say over how their money is spent."