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DCLG agree to continue dialogue with ARCH Board 12/04/2017

DCLG officials attended the last ARCH Board meeting earlier this month and agreed to continue dialogue on the government's plans for housing following the Housing White Paper.


Although officials were unable to provide any firm dates on the government's timetable for further details on introduction of fixed-term tenancies, the introduction of the higher value asset (HVA) levy or announcements on rent policy post 2020, the ARCH Board had a very positive discussion with officials and it was agreed following the meeting that further discussions between the ARCH Chief Executive and DCLG officials should continue, initially on a monthly basis, and DCLG officials would attend future meetings of the ARCH Board as appropriate.


Members of the Board were encouraged by the commitment in the recent Housing White Paper to "back local authorities to build" and acknowledged the progress made in separate discussions on "bespoke housing deals".


The Board also pressed for early announcements on the HVA levy and on future rent policy and urged further consultation and discussions with the sector. While ARCH members would generally be unhappy that the Housing Minister had announced the intention to proceed with introduction of the HVA levy, the Board at least welcomed comments made about the Minister's intention to "mitigate" the impact of the levy.


The ARCH Board raised the issue about use of RTB receipts in the context of whether there could be some flexibility in the "30% rule" and a higher percentage applied by exception in use of capital receipts as a contribution to supported housing schemes which in the main are more costly than general needs housing schemes but conversely contribute to mitigating costs elsewhere in the public purse - particularly in social care and NHS spending.


DCLG said they were keen to understand if more can be done to encourage faster delivery of Right to Buy (RTB) replacements and have been engaging with local authorities to get their views, which will be fed into their assessment.


The Board also raised whether in the interim, until such time as the higher value voids (HVV) and higher value asset levy regulations and determinations are published, the Minister would consider exempting any new-build property from inclusion in the calculation of the HVA levy. The reason being that this would act as a brake on new housing development in the HRA as councils are wary that any new build properties may be taken into account in the HVA levy and therefore have to be sold on the open market on the first occasion they become void after first letting with the proceeds paid over to the Exchequer. 


Unlike housing associations, in committing any borrowing headroom to new build, councils already must factor in to their development costs that at some point during the 30 year HRA Business Plan a proportion of any new build development will be lost to the statutory RTB and the full asset value will not be recovered and future rental income stream will be curtailed. The added uncertainty of whether any new build property will at some point exceed the yet unknown "higher value" threshold and be included in the calculation of the annual HVA levy in future simply adds another barrier to housebuilding in the HRA.  


DCLG made it clear that the regulations can be used to exempt certain types of housing, and the government has already committed to do so for housing in National Parks. More details will be provided on further exemptions in due course (if any are to be made). ARCH will be writing to the Minister on these points.

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