A housing company launched by Croydon Council is to build up to 1,000 new homes in the next three years.

Brick by Brick, wholly owned by the council, will construct houses on as many as 50 sites across the borough in a bid to stem the homelessness crisis.

Both affordable and market-value homes will be built under the plans designed to cope with rising demand and a growing population.

Some 3,125 families in Croydon were in temporary lodgings as of February this year.

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Of those, 1,120 had been waiting for a home for three to five years, 237 had been on the list for five to 10 years and 92 others had been waiting for more than a decade.

Clr Alison Butler, cabinet member for homes, regeneration and planning, said: “With many parts of the country in the grip of a serious housing crisis, Croydon is taking control and getting back into the house-building business to help our local communities and address the shortage of homes.

“We can no longer afford to sit back and let the market take its course, as it is just not delivering enough homes to meet demand, leaving many of our residents homeless or stuck in temporary accommodation, unable to afford to rent or buy.

“Although the private sector has a huge part to play in helping Croydon to achieve its targets, the council also a direct role to play in making sure we are providing enough new and affordable homes for local families.”

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Jad Adams, chairman of homelessness charity Nightwatch, praised Brick by Brick as an “all-round good idea”.

He said: “The council is much more likely to be able to get socially valuable policies through if it has its own workforce and if it is dictating the terms rather than having to negotiate with an outside contractor.

“That makes it much easier for them to reach a realistic target of social housing and also to judge the level of rents which would be charged in that social housing. It is an all-round good idea.

“In terms of trying to get more socially affordable housing in Croydon I think the council is doing exactly the right thing here.”

Last year, 880 families applied to be registered as homeless – a 15 per cent increase on 2013-14.

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Mr Adams said: “The out crying need is for more housing, particularly more social housing because there is enough housing at the high level of the market but what there isn’t is housing for people on low incomes and benefits.

“The building of news homes would have to go hand in hand with other changes, like bringing currently unoccupied properties into occupation and converting property that wasn’t originally used for accommodation to make it available for accommodation.

“There may well be overall changes in the housing markets that will lessen the pressure on our housing stock in Croydon, I can’t predict that, but I think 1,000 new homes is a very good start.”

The council spent £4.8m on temporary accommodation last year, up from £1.8m four years ago.

It expects that to rise to £5.4m in 2015-16.

The council has begun feasibility studies into dozens of potential sites new homes.