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Fixed-term council housing 06/07/2017

Latest discussions with DCLG officials indicate that the government is intent on pursuing the option of providing fixed-term council housing as outlined in the Conservative Party Election Manifesto.


The Conservative Party Manifesto pledged to "build new fixed-term social houses, which will be sold privately after ten to fifteen years with an automatic Right to Buy for tenants, the proceeds of which will be recycled into further homes."  


It appears, that following the General Election, the new Conservative Government is keen to pursue this manifesto pledge and that the provision of fixed-term council housing may feature as an element of any future funding arrangements to support councils to build and/or any Bespoke Housing Deals entered into by government with councils seeking to build new social housing.


Details of the proposal and how it would work in practice are currently sketchy. However, ARCH has put several first order questions to DCLG officials including:


  • Has the Conservative Party or Government produced any assumptions and example costings of how such a model might be expected to work so that the assumptions behind the policy can be tested?
  • What is the amount of the "significant low-cost capital funding" available? Is this in the form of low interest loans? If so what is the assumed interest rate? Alternatively, if this funding is in the form of capital grant, what is the grant rate?
  • Is there an assumption that such funding will only be available for 10-15 year fixed-term council housing or will it also be available for what might be termed "traditional council housing"?
  • What rent policy is to be applied to such 10-15 year fixed-term council housing? Social/affordable rents or higher? Will such rents be subject to CPI or CPI + 1% rent increases and will they be exempt from the current rent reduction policies to 2020?
  • Is the assumption that such fixed-term council housing should be held in the HRA or in the General Fund?
  • Are such properties to be subject to the existing statutory RTB and RTB discounts in the initial 10-15 year period after construction or will a RTB only arise at the end of the 10-15 year "fixed-term" period when the house is valued and put on the market?
  • If it is the latter, what are the proposed RTB discount rates to be given to the sitting tenant at that point? Are they the same as the existing RTB rate?
  • In the modelling of this policy, what assumptions have been made about house price inflation over the next 15 years?
  • Is it proposed that the local authority will be able to retain 100% of the capital receipt to "be recycled into further homes" when the property is sold privately after 10-15 years?   


We look forward to further discussions with the government on the answers to these questions and the details of their proposals for fixed-term council housing as they emerge.

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