A worrying amendment to the government’s Housing and Planning Bill may have an even bigger impact on the number of Council homes which could be sold off on the market. The Bill included the enforced sale of ‘high value’ homes when they become vacant. Prior to the General Election a conservative party document referred to “the most expensive third of all properties in their area”. The Conservative Manifesto itself referred to “the most expensive Council properties being sold off and replaced” when they became vacant.
Councils have been awaiting regulations from the minister determining how ‘high value’ would be measured. However, the government has now proposed an amendment which refers to “higher value stock”. The amendment, by implication could mean anything above the average value. Even worse another amendment tabled this week states that the government will be able to “use any category of housing that the secretary of state considers appropriate as a comparator”. This would in effect give the minister the absolute power to not only determine how much stock Councils had to sell, but to change the regulation at will if he thought that they weren’t selling enough. Clearly, the proposed amendments are in breach of their manifesto.
If implemented this could not only decimate Council housing numbers but lead to the deterioration of the remaining stock. Under the new financial system, ‘self-financing’, introduced in 2012, Councils were given a ‘debt’ level which was based on an assessment of how much rent Councils were expected to take in over 30 years. The more homes that are sold the more rent is lost. Councils are already losing a great deal of rent as a result of the 1% rent cut which central government is imposing over the next 4 years. Swindon will lose more than £22 million.
If a significant proportion of local authority housing stock is sold off on the open market that results in not only a decline in stock numbers, but a significant decline in rent income. Local authorities will not have sufficient rent income to maintain their remaining housing at the ‘decent homes standard’.
It’s quite clear from these amendments that the government’s housing ‘strategy’ is designed to progressively sell off Council housing. Receipts for Council house sales on the market (as opposed to RTB to the sitting tenant) will go into the government pot. They will be used to compensate housing associations for having to sell of their homes under the extension of ‘right to buy’ and towards a new brownfield fund. If there is any money left to be handed back to Councils to use it certainly won’t be much; nowhere near enough to fund a replacement home as the Conservative Manifesto suggested.
Ironically, I have just heard about these amendments after being part of a council tenant delegation which met MP Rob Buckland to discuss with him the question of reopening the 2012 ‘debt settlement’ under which Swindon Council’s Housing Revenue Account was loaded up with an extra£138.6 million ‘debt’. We were pressing him to call for the reopening of the ‘debt settlement’ in the light of the loss of rent income resulting from government policies since 2012. These amendments underline the importance of this question since the enforced sale of homes on the market would produce an even greater fall in rental income.
Hopefully the amendments will be voted down in the Lords. However, the underfunding of Council housing resulting from a decline in rental income poses once again the need for a campaign to reopen the ‘debt settlement’ and write off the bogus ‘debt’ which was imposed on local authority Housing Revenue Accounts; ‘debt’ which is paid for by tenants’ rent.
April 8th 2016