Government reveals measures to stimulate council house building
0Local authorities could be allowed to build housing on land held in their general funds without being forced to make compensating transfers from their housing revenue accounts (HRAs).
The proposal is among a number included in a government consultation released alongside its social housing green paper this week.
The government says that the move could help councils use land within their general fund for housing delivery.
The consultation says: “Where local authorities want to use land in their general fund to build housing on, they are required to compensate the general fund from their HRA for the value of the land and the value of the land is not counted as a cost in calculating the authority’s one-for-one expenditure.
Housing & Regeneration Finance Summit 31/10/2018, London Stock Exchange
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“The government is considering relaxing this restriction to allow local authorities to gift land from the general fund to their HRA at zero cost, without increasing the HRA capital finance requirement or increasing borrowing limits by the amount necessary to transfer land into the HRA.”
The government said that it is considering whether to limit this flexibility to land which has been held in the general fund for a number of years, and/or which has not been previously developed.
Another proposal included in the document would allow councils to retain Right to Buy (RTB) receipts they currently hold for five years, rather than the current three, on a one-off basis.
It said that this would help councils who are bidding for additional borrowing through the limited £1bn uplift in the HRA borrowing cap.
But it said that it did not want to extend the three-year period permanently “as the ambition is still for local authorities to deliver replacements quickly and local authorities have now had six years since the rules were introduced in 2012 to build up their experience and capacity to develop and deliver new housing”.
The consultation paper also suggested allowing a rise in the cap on the amount of build costs of new social housing that can be funded from RTB receipts from 30% to 50% “where authorities can demonstrate a need for social rent”.
However, the government is also proposing to allow RTB receipts to be spent on providing shared ownership homes, which are not currently eligible.
The document also proposes a cap on the cost of existing homes which can be bought using RTB receipts as encouragement for councils to build new homes rather than buying them.
The government has also suggested a one-off “amnesty” for councils, where they could return unspent RTB receipts to government without the 4% interest currently charged.
“If introduced, we consider that this flexibility would apply for one quarter only and that local authorities would be given advance notice of the timing to allow decisions to be taken on whether to return receipts,” it said.
In the main green paper, the government said that it would not implement provisions in the Housing and Planning Act 2016 which would have forced councils to make payments to government in respect to their vacant higher value council homes.
“The government remains committed to the principle that councils should use their housing assets effectively and should consider selling high value homes and using the funding to build more affordable housing,” the green paper said.
“However, this should be a decision to be made locally, not mandated through legislation, and we understand that the uncertainty around the future of this policy could prevent councils from building.”
Responding to the package of proposals, Judith Blake, Local Government Association housing spokesperson, said: “The government must go beyond the limited measures announced so far, scrap the housing borrowing cap, and enable all councils, across the country, to borrow to build once more.
“This would trigger the renaissance in council house-building which will help people to access genuinely affordable housing.
“We have long called for reforms to RTB in order to allow councils to build more homes, and there are some positive signs in the consultation. But we must go much further so that councils can deliver the affordable homes that our residents need and deserve, including allowing councils to set discounts locally and to keep 100 per cent of receipts from homes sold.”
