London Councils report finds government plans to hand over control of housing finance to local authorities will open up opportunities to build more homes.
Government plans to allow councils full financial control over their housing stock by April 2012 have been heralded "the biggest change to council housing since right-to-buy".
A report published by London Councils claims authorities in the capital could use their new-found financial independence to build affordable housing or improve the condition of existing stock. The government will allow councils to borrow money against rental income, although a limit to that leverage is yet to be decided.
The government will also hand over responsibility for the estimated £7.2bn public housing debt to local authorities, which are expected to service the debt through loans from the Public Works Loan Board, a government lending agency, as well as rental income.