Projects in Spelthorne could be scrapped as rising costs threaten to add £350m to council borrowing.
By Bob Dale & Emily Coady StempPlans to build affordable housing in Surrey may be abandoned because of rising interest rates and costs.
Spelthorne Borough Council could suspend all residential developments to prevent an additional £350m cost to it.A meeting of the corporate policy and resources committee on 11 September will debate officers' plans to pause council housebuilding in the borough. Documents for the meeting show the council started an "ambitious" housing delivery programme in 2018 after identifying a need for more affordable, keyworker and private rental homes for Spelthorne residents.
While interest on borrowing from the government's Public Works Loan Board was at the time on a 50-year fixed term average of 2.3%, as of August 2023 the rate had risen to 5.42%, adding £350m to the total cost over the loan, at £7m per year.Officers plan to initiate "an immediate reduction" in the council's borrowing requirements, aiming to reduce its borrowing by about £286m over the next four years, making a gross cost saving of £384m.
The report will recommend suspending the council's housing developments, looking at new ways to deliver new homes and at new strategies and policies to be brought to the council in October.
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