BOURNEMOUTH Council has revealed plans to borrow the largest amount of money in its history – £45 million.

The money will help reduce a housing waiting list that is now 7-8 years for a family home.

It will hopefully allow the council to build 1,000 properties over 30 years.

Council leader Peter Charon said the loan is ‘relatively low risk’.

“Councils don’t go for massively risky projects because we are dealing with public assets and money,” he said.

Bournemouth is taking out the loan because – like every local authority – it has to buy its way out of the Government’s system for distributing council rents, the Housing Revenue Account (HRA).

The HRA was being raided for money by the Government and ended up with a huge £21billon debt.

Local councils now have to pay off part of that debt. Bournemouth has to find £45 million, but there is an upside.

Under the HRA’s complicated formulas – condemned as “perverse” by the Audit Commission – Bournemouth was losing £3.8m of the £18m it collected in rent every year, to help subsidise poorer parts of the country When Bournemouth completes the buyout on April 1, it will keep all its rent money and have control of its own budget.

Saving the £3.8m a year will not only cover the repayments for the £45m loan, but leave enough money to build new homes.

Mr Charon said: “We have done all the sums, and it’s not just going to about breaking even – this will release money for us.”

Flats are in the highest demand, but a variety of homes are planned. The projected rents will be around 80 per cent market value.

Current tenants pay around 50 per cent.

New homes would become available under right to buy. Mr Charon said the regulations and special orders that can be put in place would make the homes unattractive for speculators.