LibDems want councils to buy 150,000 unsold homes

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by Lin Freestone

At a lecture given to the Institute for Fiscal Studies, the Liberal Democrats’ Treasury spokesman, Vince Cable, suggested that councils and social landlords should buy up to 150,000 homes on property developers’ books to help shore up the housing market.

The radical plan to buy houses and flats on a large scale to provide homes for the homeless or for those who cannot afford to buy or rent in the private sector was a response to the Government’s proposals to spend £200m on property acquisition over several years.

He suggested this relatively small sum should be perhaps ten times bigger to help reinvigorate the struggling construction sector and provide more housing as a matter of urgency. Social landlords would be given financial freedom to buy up un-sellable property at a deep discount to meet local housing need.

He understood that the more entrepreneurial social landlords in cities are ready and able to embark on a programme of this kind and are inhibited only by government conservatism and lack of imagination.

Mr Cable said councils and landlords could easily borrow against their balance sheets to finance the plan, which would help housebuilders close to collapse. It would also encourage banks not to ration mortgages.

Mr Cable reasoned that the looming recession combined with inflation could drag down construction companies and mortgage lending banks, as well as, potentially, millions of homebuyers.