East Lothian Council has agreed in principle to provide loans to developers of affordable housing to ensure the economic recession doesn't 'mothball' such sites in the county.

The decision was taken at a meeting of the full Council yesterday in response to the changing economic circumstances, which has seen developers struggle to access finance to progress affordable housing programmes.

The Council heard that the demise of the Dunfermline Building Society, which was especially active in financing new affordable housing, may further decrease the availability of development finance.

The decisions follow months of talks between the Council, developers and housing associations in the county to look at ways to boost the supply of affordable housing during the downturn. Loans would be financed through Council borrowing and repaid with interest, using the developable land as security.

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Cabinet member for Housing and Community Services Councillor Stuart Currie believes that the Council has a significant role to play: "The Council is uniquely placed to assist in these issues as we have a wide-ranging understanding of housing in East Lothian, we have guaranteed demand for the right sort of housing and we have access to secure funding from the Government.

"The housing market is changing; we have to work with all parties to change our approach to ensure that the supply of sorely-needed affordable housing doesn't dry-up."

During discussions, developers had argued that new affordable housing should be exempt from developers' contributions to incentivise such builds. Contributions are used to offset infrastructure associated with new housing development, typically towards the cost of providing increased capacity in local schools.

The Council decided not to remove developers' contributions from new affordable housing development, but is exploring ways it can fund some of the contributions for this type of housing to further increase its supply.

Councillor Currie explained: "We are already devoting significant resources to provide more affordable housing and continue with a build programme. We do not believe that removing developers' contributions from affordable housing is the best solution, but providing increased Council funding to reduce the burden may be achievable.

"Ultimately we must make sure that whatever measures we put in place are sustainable and deliver value for taxpayers."

(GK/JM)