21 February 2011
Planned reforms to housing finance put new council homebuilding at risk by leaving too much power in the hands of Whitehall, the Local Government Association has warned.
The LGA claimed that the Decentralisationand Localism Bill, currently before Parliament, does not go far enough in giving councils control of their own housing stock.
New rules under consideration would allow councils to keep rental income from their housing stock, but would still see 75% of the cash raised from council house sales going to the Treasury.
Gary Porter, chair of the LGA’s housing and environment board, said that the measure would ‘jeopardise the building of 100,000 new homes’, adding that housing finance reform was ‘long overdue’.
He said: ‘Councils must be able to retain their rents so they have the money to improve properties for current tenants and build new houses for those who need them.
‘Self-financing, if done properly, would achieve this aim, but it would appear that the Treasury isn’t willing to let go.’
Porter argued that the proposals on home sale receipts ran counter to the principle of localism.
The LGA wants to see councils able to keep 100% of the sums raised, and for limits on how much councils can borrow for house-building to be scrapped.
The organisation also called for a clause in the Localism Bill, which enables the secretary of state to demand councils pay more than 75% of sale receipts to the Treasury, to be dropped.
