Whitehall's ‘inconsistent' housing policies have ‘choked' local authority revenue streams and killed off a plan to build 500,000 new homes, a report has found.
The 2012 self-financing settlement encouraged authorities to take on £13bn extra debt to finance house building, but legislation forcing councils to cut rents has put a dent in their 30-year business plans.
According to joint Chartered Institute for Public Finance and Accountancy (CIPFA) and Chartered Institute of Housing (CIH) research, a cocktail of government policies means just 45,000 new homes are expected to be built through the settlement in the next 30 years.
CIPFA chief executive Rob Whiteman described the situation as ‘desperate' and criticised the Government for ‘tinkering with housing policy without properly thinking it through'.
He said: ‘At best, successive governments have turned a blind eye to the consequences of inconsistent housing policy.
'At worst, they have deliberately set out to undermine local authorities' best laid plans.
‘By reducing rents to soften the blow of welfare cuts, the Government has choked the revenue streams that were meant to fund new housebuilding.
‘At the same time, the Right to Buy policy has led to assets being sold off, further reducing the ability of councils to finance new homes.'
Mr Whiteman called for ‘urgent action' to reset the settlement and assurances that it would not be ‘pulled away the moment government attention turns to something else'.
The Government's pledge to build one million homes over the next five years hangs in the balance after the outcome of the EU referendum.
CIH boss Terrie Alafat said the Government must not rely solely on the private sector if it wanted to deliver its promise.
Ms Alafat warned that, due to successive government policies, many local authorities would struggle to maintain their current rate of housebuilding - let alone increase it.
She called on Whitehall to consider offering councils a new deal over their rents and borrowing in return for a commitment to increase the numbers of homes they build.
The report came as a cross-party House of Lords committee and former shadow housing secretary John Healey demanded a dramatic increase in housebuilding.
Mr Healey claimed Whitehall needed to double housing investment, while the Lords Economic Affairs committee today called for a 50% increase on the Government's 200,000-a-year target.
The committee called for more local freedoms and an end to the cap on local authority borrowing to allow councils to build more homes.
Policy officer at housing charity Shelter, John Bibby, called on new prime minister Theresa May to rethink the controversial Right to Buy scheme, claiming political and economic uncertainty post-Brexit ‘makes this the absolute worst time' to implement it.
In a blog post, he wrote: ‘The current uncertainty about the future of house prices and the economy could make it impractical to implement, could see us sell off public assets at bargain basement prices and whip away part of the housing safety net exactly when it's needed.
‘The new government can and should scrap it.'
New communities secretary Sajid Javid has prioritised housebuilding and home ownership following his appointment yesterday.
