ARCH has expressed concern about what latest announcements on
Right to Buy (RTB) could mean for housing finance reform.
As yet there is no detail on either discount rates or pooling
arrangements which will determine the impact of this change. ARCH
is concerned that the Government's new RTB proposals may jeopardise
plans for councils to take local control of housing resources and
make long term business plans.
ARCH has campaigned for the Housing Revenue Account subsidy system
to replaced with a fairer funding system and its members are
preparing to implement the new self-financing model in April 2012.
While pleased that members will be able to retain income from rents
under the new system in exchange for taking on high levels of debt,
ARCH has previously argued against the pooling of RTB receipts.
This is now a much greater concern following Prime Minister David
Cameron's announcement that his Government will be raising
discounts available to tenants who want to buy their homes and
promoting up to 100,000 sales nationally.
ARCH secretary John Bibby, director of housing and community
services at Lincoln City Council, commented: 'Stock retaining
authorities agreed to take on billions of pounds of debt
collectively in exchange for local control of local resources. We
have spent months consulting our communities, putting Business
Plans in place and balancing the books based on debt and RTB
levels. With just five months to go, that is now thrown up in the
ARCH is delighted that the Prime Minister has given a commitment to
replace any social rented stock sold under the RTB on a one for one
basis and looks forward to further announcements on how this is to
At present councils can only keep 25% of receipts from the sale of
council houses. Drawing upon figures from his own authority, Mr
'After allowing for current discounts and pooling of capital
receipts the City Council received only £16,800 from the recent
sale of a three bedroomed council house.
'I would question how my council could build a new three bedroom
house for £16,800 to replace the one sold under the RTB. The only
way this might have a chance to work would be if councils are
allowed to keep 100% of RTB receipts and even then it might not be
possible.' He added:
'There may well still be debt outstanding on the RTB properties
sold and if government increases discounts then the capital
receipts available to the council will fall even further. The debt
settlement under self-financing already assumes that the 25% RTB
receipt will be used for re-investment in the existing stock to
deliver Decent Homes.'
Brian Reilly, deputy director of housing at the London Borough of
'At my own authority we are aware of the benefits of RTB in
delivering mixed and sustainable communities. However, there is a
real risk to self-financing if receipts are pooled centrally. To
enable self-financing to operate in the spirit of local control in
which it was conceived, it is clearly beneficial for 100% RTB
receipts to be retained by councils. This is a key element of any
effective asset management strategy and is even more significant
should increasing numbers of RTB sales take place at higher