Third way for social homes

6 Apr 00
The government has offered high-performing councils a 'third way' to hang on to housing stock, as registered social landlords were put on course to become the dominant housing providers by 2004.

07 April 2000

A green paper published on April 4, dubbed the biggest shake-up in housing for 23 years, steps up the government's campaign to strip councils of housing ownership.

Under these proposals, stock transfers will be accelerated, with 1 million houses moved to RSLs within five years. This will outstrip current transfer levels – 400,000 council homes have moved since 1988.

Under the programme, RSLs will dominate the housing market by 2004, with local authorities taking what the green paper describes as a more 'strategic' role, but which some will interpret as a back-seat one. But it is unlikely to be a housing free-for-all for RSLs, with the government expecting more competition within the sector before it approves any transfers.

It also intends to limit the number of homes that can be transferred to 12,000 per deal to try to prevent what housing minister Nick Raynsford called a 'reproduction of monopoly providers'.

But the government has thrown a last lifeline to its stable of 'high-performing' councils with plans to lift borrowing restrictions on housing stock. Authorities will be encouraged to set up 'arms'-length' housing companies and meet stringent Best Value targets.

In return, they will be allowed to retain a higher percentage of rental income to finance borrowing for housing stock improvements.

Raynsford said: 'We can't stand aside and let council housing rot. We must have something for tenants who can't get on the transfer list or don't want to.' Both measures are expected to tackle the £19bn backlog in housing repairs within ten years.

The government is also considering a 'starter home initiative', aimed at providing low-cost, affordable housing for public sector workers. The initiative will include interest-free loans to boost mortgages for nurses, firefighters and the police, and cash incentives to encourage developers to build more low-cost housing. Local authorities and housing associations will bid for the cash and will have to provide strong evidence of a housing shortage, plus value for money. The scheme is yet uncosted, although estimates have put it at up to £2bn a year.

Deputy Prime Minister John Prescott may face an uphill struggle wresting the cash from Chancellor Gordon Brown, who is understood to be reluctant to put financial pressure on an already overheated housing market.


Did you enjoy this article?