Corporation bids to double building programme to 40,000 homes a year

Norman Perry, the body's outgoing chief executive, said he would also back Places for People's call for corporation investment cash to be classed as a grant instead of a loan – allowing developing associations to borrow up to £100m more from lenders. This is prevented at the moment by Treasury accounting rules.

Perry was speaking in the wake of the pre-Budget report by Gordon Brown and Kate Barker's interim report into housing undersupply last Wednesday.

The Barker review stated that 146,000 extra homes need to be built each year. Of these, 101,000 must be affordable housing. Perry believes this is where the corporation could contribute.

He said: "The Housing Corporation could cope with double the present programme of 22,000 a year. If we were given the funds to build 40,000 homes a year, that is what we would deliver.

"If Barker says 'double it' then we would see this as welcome ammunition in discussions with the ODPM and the Treasury ahead of the comprehensive spending review next summer."

He added: "On balance I would support writing off social housing grant over time. The corporation has a lot of sympathy with associations such as Places for People. They have advanced the argument that they would be able to increase their borrowing capacity by more than £100m."

Perry also said he felt associations should be able to set up real estate investment trusts. The model was recommended by Barker to provide tax incentives that will encourage institutional investors to plough money into private and public housing.

"Associations should be encouraged to do REITs to attract investment into the sector. I would be happy for associations to take on any amount of financial risk so long as they are competent and confident they can deal with it."