• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • WMCA signs £4bn investment agreement with L&G

    May 18, 2022

  • Bill will give UK Infrastructure Bank power to lend directly to councils

    May 18, 2022

  • £400bn pension group collaborates on climate transition initiative

    May 17, 2022

  • CIPFA rejects proposal for vote on publication of fraud hub report

    May 17, 2022

  • John Turnbull elected president of the SLT

    May 12, 2022

  • Pension pool identifies biodiversity as a priority

    May 11, 2022

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews
  • Briefs

Election 2015: Right to Buy pledge could undo HRA reforms

0
  • by Colin Marrs
  • in Funding
  • — 16 Apr, 2015

3598534263_aaba5a75c0_z_3Forcing councils to sell expensive homes to fund an extension of the Right to Buy (RTB) programme for housing associations would significantly undermine the 2012 housing revenue account (HRA) reforms, according to experts.

The Conservative Party, in its 2015 general election manifesto released this week, said it would introduce legislation compelling councils to dispose of the most expensive third of their homes as they become vacant.

It said that this would raise £4.5bn a year, which would fund discounts to housing association tenants buying their homes, as well as providing cash for local authorities to replenish their stock.

But Chris Buss, director of finance at London Borough of Wandsworth, said: “This is saying that they would redo the 2012 HRA settlement without looking at the impact of doing so.”

Those reforms ended central government subsidies to HRA accounts, allowing councils to keep their rental income and use it to fund their housing stock.

But Buss said that the RTB proposals would erode the business plans drawn up by councils following the reforms.

He said: “When we first did the deal back in 2012, we all made assumptions on rental income.

“If a third of those units now go out the door, then we have debt to fund with no rental income to finance it.”

A Conservative Party spokesman told Room151 that receipts from the council housing sales would be used to pay of local authority debts held against the sold expensive housing.

However, Steve Partridge, investment and finance director of affordable housing finance company QSH, told Room151: “In reality, councils are better off with the property yielding net rent than selling it and repaying the debt. This won’t completely wreck councils’ HRA business plans but it is another weakening of them, following the increase of discounts available on council RTB sales.”

Richard Harbord, former chief executive of Boston Borough Council, said: “Removing a third of expensive homes would, of course, make a big difference to councils’ account surpluses. It would have a negative effect and make it more difficult to balance the accounts – particularly as they would be left with the dross.”

Partridge added that, if implemented, the Tory proposals could force councils to consider building new affordable housing using models involving partnerships with pension funds, which do not require council financing. These would not be covered by the proposals to force councils to sell their stock, he said.

He also pointed out that a number of councils have already transferred housing stock wholesale to housing associations, implying a mechanism of central collection and redistribution would be necessary to make the arrangements work.

Buss added that the proposals were likely to put extra pressure on councils’ general funds, because a reduction in council housing will mean more has to be spent on temporary accommodation for the homeless.

Alongside the manifesto, the Conservatives released a table showing its assumptions on expensive property thresholds by region and property size (see below).

Conservative Party table of expensive housing thresholds

Region1 bedroom2 bedroom2 bedroom4 bedroom 5 or more bedrooms
North East80,000125,000155,000250,000310,000
North West90,000130,000160,000270,000430,000
Yorkshire and the Humber85,000130,000165,000265,000375,000
East Midlands105,000145,000175,000320,000430,000
West Midlands100,000145,000180,000305,000415,000
East155,000220,000265,000440,000635,000
London340,000400,000490,000790,0001,205,000
South East165,000250,000320,000495,000755,000
South West135,000200,000260,000375,000535,000

In London, for example, an expensive one-bedroom flat is defined as one costing more than £340,000, compared to one costing £80,000 in the North East.

Paul Dimoldenberg, leader of the Labour group at Westminster City Council, said minimum home values in his borough all exceeded the cap, meaning it would be forced to sell off all homes which become available each year.

He said: “The stark implications of this policy is that no local families will ever be rehoused in Westminster again as the council will be forced to sell off all its flats which come vacant. Only the rich will ever be able to live in Westminster.”

Simon Parker, director of think tank New Local Government Network, said: “Forcing councils to sell-off their highest value properties is simply bad policy.

“We need to make it easier for councils and housing associations to build more affordable homes, not undermine their ability to do so through a giveaway to a relatively small number of existing social tenants.”

Cllr Jim McMahon, leader of the Labour Group at the Local Government Association, said: “This is a half-baked, unworkable idea from the Tories which will mean less homes for working people.

“They say it will cost £4.5bn a year paid for from selling off expensive council homes, but these numbers just don’t add up.”

Photo (cropped): SecretLondon123 (Flickr)

Share

You may also like...

  • Finance chiefs may have to ’embrace the uncertainty’ in financial planning 11th Jun, 2021
  • Waste authority to issue green bond through UKMBA 2nd Feb, 2022
  • Finding private sector solutions to the housing crisis 16th Mar, 2022
  • MRP consultation: don’t throw the baby out with the bathwater 8th Feb, 2022

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 10 hours ago

    Back to the future for the PWLB: The Public Works Loan Board is tightening its lending criteria to ensure that loans will be repaid by local government borrowers. But, asks Peter Findlay, shouldn’t they have been doing[...] dlvr.it/SQcmmm pic.twitter.com/bVv4fe0Xlv

    Room151 11 hours ago

    Great piece from Peter Findlay on the PWLB’s tightening of its lending criteria. He raises some pointed questions for the Treasury and explains why the ‘casino council’ characterisation was simplistic and inaccurate. #PWLB #localgov room151.co.uk/treasury/back-…

    Room151 12 hours ago

    The Queen's speech highlighted the need for accelerating UK infrastructure investment into levelling up projects and cutting emissions. @UKInfraBank #QueensSpeech #ClimateAction #emissions Click the link below to read 🔻🔻 room151.co.uk/brief/bill-wil… pic.twitter.com/hFmF2veVIa

    Room151 12 hours ago

    Huge funding heading to the @WestMids_CA from @landg. @andy4wm #LevellingUp #netzero #regeneration Click the link below to read 🔻🔻 room151.co.uk/brief/wmca-sig… pic.twitter.com/ajhZhia6mx

    Room151 16 hours ago

    LGPS governance, Cagney and Lacey style: What regulatory response can be expected following the publication of the Good Governance project’s Phase 3 report and the closure of the Single Code of Practice consultation? Susan Black offers[...] dlvr.it/SQbfXf pic.twitter.com/xwqHOEu2AP

    Room151 2 days ago

    More evidence of the importance of emerging markets in the journey to net-zero. @BordertoCoast @BrunelPP @northernlgps @EAPensionFund @WYPF_LGPS Click the link below to read 🔻🔻 #LGPS #NetZero #NetZeroCarbon #EmergingMarkets room151.co.uk/brief/400bn-pe… pic.twitter.com/qCm0EGxzLn

    Room151 6 days ago

    ‘Urgent consultation’ issued in response to continuing audit delays: CIPFA and the Local Authority Scotland Accounts Advisory Committee (LASAAC) have announced another “urgent consultation” to consider proposals to address the latest issue that has led… dlvr.it/SQJ0kV pic.twitter.com/s6vw0bnGXO

    Room151 7 days ago

    Bags of capacity – now to housing delivery: HRAs have been freed up and councils are starting to invest, but some remain cautious, writes Steve Partridge. He suggests that a minimum of £10bn of additional borrowing could be[...] dlvr.it/SQDvxk pic.twitter.com/yZmoWzHv6U

    Room151 7 days ago

    Bags of capacity – now to housing delivery room151.co.uk/treasury/bags-…

    Room151 1 week ago

    To Michael Gove: a modest proposal: Conrad Hall has written an open letter to the levelling up secretary suggesting an unusual (and tongue-in-cheek) proposal to help councils predict next year’s government grant. Dear Secretary of State,[...] dlvr.it/SQ9GpX pic.twitter.com/mSX1xgeL8a

    Room151 1 week ago

    Queen’s Speech: an ambitious plan hampered by omissions: Richard Harbord examines the impact of the government’s legislative proposals on councils, and concludes that local authorities expect and need more from central government. However you view the… dlvr.it/SQ8hmP pic.twitter.com/BsnziyNPIO

  • Categories

    • 151 News
    • Agent 151
    • Audit
    • Blogs
    • Business rates
    • Chris Buss
    • Cllr John Clancy
    • Council tax
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Education
    • Forum
    • Funding
    • Governance
    • Graham Liddell
    • Housing
    • Ian O'Donnell
    • Infrastructure
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • Levelling up
    • LGPS
    • Mark Finnegan
    • Net Zero
    • Private markets
    • Recent Posts
    • Regulation
    • Resources
    • Responsible investing
    • Richard Harbord
    • Risk management
    • Social care
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Transport
    • Treasury
    • Uncategorized
    • William Bourne
  • Archives

    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story News Roundup: Strathclyde’s equities, Welsh LGPS fees, PWLB loans, Moody’s EU fears, HRA accounting
  • Next story Ratings criteria under pressure from EU bail-in regs

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares