Burnley to stay in red despite housing transfers

12 Aug 99
Council leaders in Burnley are in urgent talks with the government over how to clear their housing debt ahead of the proposed transfer of the authority's entire stock to a housing association.

13 August 1999

Director of finance Pam Williams said the government recognised that debt will become an increasing problem, particularly with transfers of homes requiring significant levels of investment.

Tenants of 5,354 homes in the Lancashire town voted overwhelmingly last month in favour of being transferred to Burnley and Padiham Community Housing. But the likely capital receipts would still leave Burnley's housing revenue account about £20m in the red.

It is the first time a council has not expected to clear its debts after handing its stock over to a registered social landlord. The same problem, however, could arise later this year in Coventry where tenants of more than 20,000 homes are due to vote on whether to transfer to RSLs.

Burnley is refusing to spend any further money on the transfer, or assist the new housing association with a proposed improvement programme, until the debt issue has been resolved.

A spokesman for the Department of the Environment, Transport and the Regions said a consultation paper on tackling overhanging debt would be issued very soon. He did not expect the transfer in Burnley, due early next year, to be held up.

'We are looking at various accounting methods to see how we can best deal with it,' he said. 'What any council will be looking for is a clean break and a debt pay-off. That's something which has to be considered.'

The Burnley vote comes at a time of accelerating stock transfers to RSLs. Within seven years, local authorities could own fewer homes than housing associations.

While the council sector is still nearly three times larger than the RSL sector, the number of local authority homes expected to be transferred this year – 140,000 – is more than double last year's 65,000. Stock transfer homes now make up more than a quarter of all RSL properties.

Anthony Mayer, chief executive of the Housing Corporation, said the rate of transfers will make a major difference to the sector, which currently includes more than 1.2 million properties. The corporation will be discussing regulation of the expanded RSL sector with the DETR.


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