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Agreements under Clause 72 of the Housing and Planning Bill 18/03/2016

During debates on the Housing & Planning Bill in the Commons Ministers have signalled a willingness to open up early talks with councils in high-value areas regarding agreements to retain some of the RTB levy to enable one for one replacement of any high-value council houses sold.


Clause 72 of the Housing and Planning Bill allows the Secretary of State to enter into an agreement with a local authority for the authority to retain a portion of the capital receipts that would be raised through the sale of high-value council housing to deliver replacement housing (or as Ministers refer to it: "additional housing") for those high-value homes sold under the policy.


Some ARCH member councils in high-value areas have already approached the DCLG about entering into such agreements and details are beginning to emerge about how this might operate:


Early indications from such discussions suggest that:


  • DCLG is at an early stage in its thinking about the potential approach towards entering into agreements with local authorities to provide replacement homes in-lieu of paying all or some of the levy. However, DCLG are keen to enter into a dialogue with councils to replace high-value voids that are sold.


  • DCLG are still working on the high-value thresholds to be applied and are working through the information provided by councils following the request for information sent to local authorities at the end of 2015 about voids etc.


  • DCLG officials are looking at putting forward a range of options to Ministers of how the thresholds could be set (e.g. national, regional, local etc.)


  • DCLG officials are looking at the possibility that any newly-built replacement properties would be exempted from the high-value voids policy, possibly through an exemption applying for all properties built after a specified date.


  • DCLG are looking to lay down the required Regulations that would define "high-value thresholds" within a week or so after the Housing and Planning Bill received Royal Assent - possibly around the end of April/beginning of May 2016 with the Regulations laid around mid-May 2016.


  • The Regulations would set out the approach/framework to how the high-value thresholds would be calculated, including details of which types of void properties would be exempt. The intention being to give local authorities a clear idea of how their individual levies would be calculate.


  • Separately DCLG intend to set out a draft determination, around the same time, of individual payments to be made by each individual local authority, based on the approach/framework set out in the regulations. The Bill as drafted obliges DCLG to consult all local authorities on the draft determinations and this is likely to commence around the same time as the regulations being laid down.


  • In regard to payment of the RTB Levy, the likely timescale for when the first payment would be required from stock retained councils may be around January 2017. If this is achieved, it would be a payment for one quarter only, based on 25% of the previously-advised annual determination for the local authority. In regard to subsequent payments for 2017/18 onwards, it is understood DCLG are working on the basis that local authorities would continue to make quarterly payments to the CLG.


  • It is also understood that DCLG may consult local authorities on how future payments under Clause 72 (i.e. beyond the first payment) should be calculated to reflect changing vacancy rates and changing property prices.


  • DCLG is yet to finalise how any agreement process may operate and it is likely that they may consider setting up a working/technical group to consider all the issues relating to agreements to provide replacement properties.


We'd be interested to know if your council has approached the DCLG regarding the possibility of entering into an agreement under Clause 72 of the Bill and if so whether the response you have received chimes with the points above.


If you have had discussions with DCLG on entering into an agreement under Clause 72, please email: John Bibby, ARCH chief executive. 

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