Social Housing 'Deals' Plan Builds On CLG Work

Ongoing behind the scenes work with three councils will form the basis of flagship Conservative plans for ‘bespoke deals’ to build social rented housing, it is understood.  In a statement, Mrs May said she plans to enable “the most ambitious” councils and housing associations build “a new generation” of socially rented properties. This builds on behind-the-scenes work with three authorities – Stoke, Sheffield and Newark and Sherwood – which have been discussing a package of measures that could allow them to step-up house building. The packages discussed would include flexibility on borrowing caps – imposed under the self-financing deal in 2012 – but also involve new deals on rent setting and bland assembly powers. Read more on Inside Housing.

MPs: Scrap Housing Revenue Account Cap Where Housing Unaffordable

Borrowing caps on councils’ Housing Revenue Accounts (HRA) should be raised – and, in some cases, scrapped – to help boost housebuilding, MPs have recommended. A report by the Communities and Local Government Committee, Capacity in the Homebuilding Industry, suggests that HRA borrowing caps are limiting local authorities’ ability to build. The report notes that research found that 57% of 141 councils had not made use of the additional borrowing capacity since the introduction of self-financing in 2012. Download the report from the Parliament website.

Councils Hold Back From New HRA Borrowing

Billions of pounds in potential housing investment are being shored up by councils for fear of further changes to rent-setting rules. A survey of 141 councils that run social housing found just 43% have made use of their official permission to borrow more money for housing since 2012. As a result of this widespread reticence, these 141 councils’ collective borrowing power has actually increased from £2.5bn in 2012 to £2.6bn in 2016/17 amid urgent demand for new housing across England. The findings are the most extensive analysis of the multibillion pound borrowing powers awarded to councils as part of the coalition’s historic Housing Revenue Account (HRA) self-financing settlement. Read more on Inside Housing.

Call On Lords To Stop 'Reverse Of Council Housebuilding'

The National Federation of ALMOs (NFA) and Association of Retained Council Housing (ARCH) have combined forces to call upon Peers to support amendments to the Bill that will ensure that the recent renaissance in council house building is not reversed.  Since government introduced its new regime of self-financing for council housing in 2012 there has been a surge in local authority house building with over 6,000 new council homes having been built in England. Council house-building is now at a 23 year high.  Yet, despite the welcome contribution this has made towards the Governments own targets on housebuilding, the Housing and Planning Bill (in its current form) threatens to not only halt but reverse, this progress. Download the document from the NFA website.

264 Sold Through Right to Buy and Zero Replaced

A local authority has been slammed by the government for not replacing a single property of the 264 homes sold under the Right to Buy scheme.  The response by the CLG came after Labour's London Assembly member for Waltham Forest, Jennette Arnold, accused the Treasury of "betrayal" for pocketing £86.7m of £412.7m raised by London councils through the council-home buying scheme. Housing minister Brandon Lewis revealed the figures in a letter to London-wide assembly member Tom Copley. He argued a proportion of income from Right to Buy sales continues to be paid to the Treasury as part of £862m owed by local authorities through a self-financing settlement introduced in 2012. Despite this agreement, Ms Arnold called on the government to pay it back and said the £87m shortfall was "contributing to a disturbing housing situation" in Waltham Forest.  Read more on the Waltham Forest Guardian.

Social Rented Housing – Parliamentary Written Answer

Mr Jim Cunningham: To ask the Secretary of State for Communities and Local Government (1) what steps the Government is taking to ensure that local authorities are able to build or purchase properties for social housing; 

(2) how much the Government has set aside for local authorities to build or purchase properties for social housing in each of the next five years

Kris Hopkins [holding answer 6 February 2014]: Following the reform of the Housing Revenue Account and introduction of self-financing of council housing in April 2012, all stock-holding local authorities have a stable source of funding with which to make long-term business plans, which can include the provision of new affordable homes. The Government will also be making available an additional £300 million Housing Revenue Account borrowing, across 2015-16 and 2016-17, to support about 10,000 new affordable homes. In addition, local authorities can bid for a share of the £3.3 billion of Government funding to support delivery of 165,000 affordable homes between 2015 and 2018. An independent review, led by Natalie Elphicke and Keith House, will review the role that all local authorities can play in housing supply, which is due to report by end 2014.

Voluntary Code for a Self-Financed HRA

The introduction of Housing Revenue Account (HRA) self-financing has given local authorities the freedom to develop and deliver a more positive, less constrained, vision for council housing. The Chartered Institute of Public Finance and Accountancy and the Chartered Institute of Housing believe that it is vital that local authorities have effective governance and financial management frameworks in place in order for self-financing to be a success. In order to support local authorities in assessing and developing these frameworks the two institutes have worked together to produce a voluntary code of practice for the sector.  Download a copy of the code from the CIH website.

25,000 Homes to Be Built Thanks To HRA Change

English councils will build up to 25,000 new homes in the next five years as a result of the freedoms that came with last year’s self-financing revolution. The figure, calculated for the first time, comes from a report by the Association of Retained Council Housing. The report will show that the end of the housing revenue account subsidy system, which allowed local authorities in England to keep rental income rather than pay it into a centralised pot, has sparked the first major wave of council building programmes for a generation.  Read more on Inside Housing.

Southwark Agrees To First Self-Financing TMO

Last May Southwark Council had agreed in principle to the idea of Leathermarket Joint Managing Board becoming self-financing. Councillors have now gone a step further and given the green light for the TMO to becoming self-financing from 1 April. This means it will keep rental income from the 1,451 homes it manages on behalf of the council. Currently, TMOs do not keep rental receipts but receive an annual allowance from councils.  Read more on the Southwark Council website.

Council Reveals Private Rent Plan

A London council has asked the government for permission to rent its empty social homes at market rates.  Conservative-led Hammersmith & Fulham (H&F) Council said that allowing local authorities ‘the same freedom as housing associations’ to let void or new build properties on the private market could help generate income to reinvest in new affordable housing.  Andrew Johnson, cabinet member for housing at Hammersmith & Fulham, said the council envisaged offering no more than 50 out of the 500 homes that become void every year at market rent, which could be up to three times the current rate.  Mr Johnson added the council was considering the idea in response to the self-financing reform of the housing revenue account under which the west London authority took on £218 million of debt, leaving it with annual interest payments of £12 million. It has just £33 million of ‘borrowing headroom’ beyond its HRA debt.  Read more on the H&F website.

Outsourcing Model to Fund New Build

A new repairs outsourcing model has been developed that could increase the borrowing power of councils and finance new house building projects.  If successfully implemented, it could create hundreds of millions of pounds of additional ‘headroom’ underneath councils’ government-imposed borrowing caps following reform of the housing revenue account system. The new model works by delivering a minimum 10 per cent saving on major works by using private sector partners.  The savings would be used to make regular payments to a private sector company, which it could use to borrow against and return the capital funding for investment.  According to proposals from housing consultancy Is4, councils faced with limited borrowing capacity as a result of self-financing rules would be able to fund new house building programmes by outsourcing major repairs work.  Read more on Inside Housing.

Councils 'Doubtful' Over Shapps' Right to Buy Claims

From 2 April local authority tenants in England could qualify for a maximum discount of up to £75,000 to buy their council home and the Government wants councils to use the receipts to replace every home sold.  The Association of Retained Council Housing (ARCH), however, argues that the plan will not deliver the one-for-one pledge.  The government has stated that any commitment to replace applies only to sales additional to those expected under the current Right-to-Buy rules.  The self-financing settlement includes an assumption about how many sales each council can expect and the total receipt they will yield.  Of this, the Treasury takes 75% and the rest goes towards the council’s ability to fund capital spending. Only receipts above this amount will be used to replace sold homes.  With bigger discounts, and thus smaller receipts, councils will have to sell more homes to achieve the assumed receipt.  The government hopes that raising the maximum discount to £75,000 will deliver a big increase in sales; but this may be too optimistic.  RTB sales in many areas are currently well below expected numbers. This year, Birmingham, England’s largest social landlord, will sell only around 150 homes out of an expected 200.  And with 3 out of 4 tenants receiving housing benefit, raising the RTB discount may not have that much impact.  Receipts available to build new homes are unlikely to yield one-for-one replacement in most areas.  Read more on 24dash.

Housing: Rents – Parliamentary Written Answer

David Mowat: To ask the Secretary of State for Communities and Local Government what consideration he has given to extending the timetable for rent convergence between local authority housing and registered social landlords beyond 2015-16.

Andrew Stunell: The Government have confirmed their intention to continue with the last Administration's policy of rent restructuring with convergence in 2015-16 and have no plans to change this.  Rental income assumptions underpin the local authority housing self-financing settlement, which begins on 1 April 2012. This initiative sees the end of the complex and unwieldy housing revenue account subsidy system and returns responsibility for social housing finance, including rents, to local communities.

Council Rents to Rise by Nearly 7%

Westminster City Council has announced plans to raise council rent by almost 7 per cent this year. As part of the new “self financing” regime for council housing, councillors from the London borough have agreed a 6.96 per cent rise on council rents, which will cost tenants an extra £379 a year. However, the council said the rise will be below Government guidelines which advised a 7.2 per cent increase. Read more on 24dash.

Rent Rise Council in £30m Housing Pledge

A council is raising rent by 7 per cent but increasing investment in its housing stock by almost £9 million. Basildon Council in Essex announced in its Housing Revenue Account budget, that total spending on its 11,321 homes in 2012/12 will be £30 million. According to the council, spending on housing for the previous financial year was just over £21 million. A switch to self financing means the authority has to raise rents this year to service some of the £52 million debt which must be paid to the Communities and Local Government department by 28 March. Read more on the Basildon Council website.

Rental Income Buyout for Self-Financing Councils Lower Than Expected

The government has finalised the amount that local authorities will have to pay to take control of their rental income, with many of the final payouts coming in lower than expected. After making the final calculations, the CLG has confirmed that 136 councils will be required to make a payment to the government, with the London borough of Wandsworth to make the largest payment of £433.6m. However, 33 councils that are currently subsidised by the government will receive payments to help reduce their inherited debt, with the London borough of Hackney to receive the largest share with £752.6m. Councils making the move to self-financing are expected to borrow at discounted rates from the Public Works Loan Board in order to service the debt. The move to self-financing will apply from 1 April 2012, with payments from councils due on 28 March 2012. Read more on the Guardian website.

Councils Reject Government's Rent Rise Plans

Ipswich Borough Council is the latest local authority to reject Government guidelines that propose a 7.2 per cent rent rise for council tenants. Councillors decided to settle for a 5.6 per cent rise instead. Campaign group Defend Council Housing has recently warned that the Government’s self-financing reforms – which will see councils shoulder a near £20 billion debt burden – will force councils to endorse “huge rent rises”. A spokesman for Ipswich Borough Council told 24dash: “The 7.2 per cent rise was part of Government guidelines and was the highest we could go to. “However we decided to settle for 5.6 per cent, in accordance with the Retail Price Index.” Read more on 24dash.

High Rents Prompt Concerns over HRA Debt Figures

Councils have objected to the rent figures used in the final calculations for the payments they will have to make or receive as part of the move to self financing. The government issued a final list of the payments councils must make to end the housing revenue account subsidy system yesterday. But in an accompanying summary of responses to the HRA consultation it emerged the majority complained about the way the sums were calculated. Councils are concerned about the high rent rises due in 2012/13, which are running at about 8 per cent due to a high inflation figure in September. Many called for the government to diverge from its rent setting formula to allow them to impose lower rises, but officials rejected their pleas. The rent figures are built into the complex calculations that determine how much of around £29 billion of housing debt each local authority must take on to move to self financing. Most respondents to the consultation said they would have to impose the full rent rise to get the funding needed for HRA reform. Read more on Inside Housing.

Tenants Face 8 Per Cent Rent Hike

Just four of England’s 50 largest social landlords are planning to protect tenants from significant rent increases next year. Of the 21 largest stock-owning councils that responded to an Inside Housing survey, just three said they would not impose the maximum increase allowed, based on the retail price index as it stood last September, when it peaked at 5.6 per cent. As a result, tens of thousands of council tenants will face eye-watering rises of more than 8 per cent. Rents on Newcastle’s 29,000 homes will go up by 8.2 per cent, while residents in Camden’s 23,000 homes will face a hike of 8.1 per cent. Local authorities will take control of setting rents from central government this year as part of self-financing reforms. Read more on Inside Housing.

Councils Urged To Be New Force In House Building

Councils have been challenged to take advantage of their increased independence through self-financing reform by investing in the building of new homes. Speaking at the Local Government Association’s housing finance conference, LGA president Lord Best told councils to borrow against their housing stock to deliver extra housing. ‘I think that the time will come when we think of councils directly and indirectly as providers of housing in a very major way,’ said Lord Best. Read more on Inside Housing.