BUSINESS leaders have warned the region it needs to triple the number of homes it builds each year or face a housing crisis.

Developers and business leaders have called on councils to make sure they are doing all they can to free up land and stop putting restrictions in place before allowing planning permission.

Last year only 4,600 new homes were built in the North East, down from more than 8,000 a year before the recession.

It is thought that at least 12,000 new homes a year are needed to ensure the region’s economy grows at the lowest expected rate.

Now councils are facing pressure to look again at what restrictions are in place stopping or limiting home building.

The North East Chamber of Commerce said last night the region would need at least 55,000 new homes by 2027 just to keep up with growing demands.

Building 200,000 would, as well as generating thousands of new jobs, hand the region’s 12 councils a £1.2bn windfall from the Government’s New Homes Bonus over the next 16 years.

Philip Baker, chairman of the Chamber’s development group and planning director of Banks Group, said: “This demonstrates that decisions on housing stock levels across the North East will have a significant influence over our future economy.

“Not only will house building support the region’s economic growth aspirations, it will also bring much-needed revenue back into council coffers. We need to see local authorities embrace the opportunities this presents and to work with developers to provide a pipeline of sites to deliver homes where people want to live.”

The housing call was backed by economics consultancy Nathaniel Lichfield and Partners, whose Newcastle-based senior associate director Andy Groves said: “These figures highlight the potentially huge mismatch between housing demand and supply in the region and how important it is that local authorities focus on increasing delivery rates from their current low levels in order to house our population, create jobs and to support public finances.”

Many in the North East had previously argued there were too many regional limits on housing, including Berwick MP Sir Alan Beith.

He said: “We’ve at last got rid of the previous Government’s Regional Spatial Strategy which placed completely unnecessary restrictions on house building in Northumberland.

“Now the region needs significant expansion in social and private housing to meet future requirements, and I welcome the first stages of the Coalition’s plans to promote social housing and free up the private sector.”

Council leaders have said there are plans in place to increase the housing supply.

A spokesman for Newcastle Council said: “We believe we have and will continue to show strong leadership in maintaining the momentum of development in spite of very difficult economic circumstances.

“For example, we are currently effectively acting as a developer selling 80 apartments in a refurbished tower block with the council arranging mortgage finance itself for prospective purchasers of up to 95% of the purchase price.

“We are also looking to use apprentice-led new build schemes to improve skills and create much-needed job opportunities in the city and we are also looking at improving the amount of housing available by making use of shared ownership properties.”