Wednesday, 26 April 2017

Authorities to flatten thousands of homes to reduce housing revenue account debt allocation

Councils to demolish homes to cut HRA debt

Councils will demolish thousands of homes to slash the amount of debt they take on under the imminent reform of the housing subsidy system.

Some authorities have drawn up plans in a matter of months this year to knock down hundreds of homes for financial gain. Other councils have fast-tracked proposals, an Inside Housing investigation has found.

They have acted because of an in-built ‘demolition deadline’ in plans to scrap the housing revenue account. Under the system the majority of town halls in England will take on a share of the existing £21 billion national housing debt based on the number of properties they own.

But stock set to be demolished before 2017 will not be included in the calculations - providing a sizeable financial incentive to demolish. It is understood the number of homes councils told the Communities and Local Government department they will demolish exceeded its expectations.

Nottingham and Birmingham councils have drawn up some of the most eye-catching plans - proposing to flatten more than 2,000 homes between them. All councils argue the homes picked would be costly to maintain and would not have a long-term future anyway.

Michael Gelling, chair of the Tenants’ and Residents’ Organisations of England, said: ‘You have all this pressure [waiting lists] on the social housing sector and this will make it worse.’

In a paper seen by Nottingham Council’s executive board last month, the council, which currently has 13,000 people on its waiting list, said its arm’s-length management organisation had assessed all 29,000 of its homes as a result of the HRA reforms.

Demolishing 973 homes would reduce its HRA debt by £10.2 million. But the plans could prove controversial in some areas - 50 per cent of residents responded to consultation on one 209-home estate, with 51 per cent of those saying they favoured demolition.

Birmingham plans to flatten up to 1,279 homes. It failed to respond to Inside Housing’s inquiries but reportedly had more than 17,000 people on its waiting list earlier this year.

Council reports said the homes would be ‘costly to maintain’ and that the job to identify homes ‘is now underway as it will save a lot of money in debt repayment costs if tower blocks are identified for demolition by September’.

A paper presented to Eastbourne Council, which is demolishing a number of retirement blocks, added, ‘further demolitions and disposals of retirement courts will be necessary to allow the council to develop a viable HRA business plan’.

Ian Fitzpatrick, senior head of community at Eastbourne Council, said: ‘This process is all about good asset management over the long term.’

A CLG spokesperson said: ‘As landlords, local authorities are best placed to manage their housing stock taking account of local conditions, both of the housing stock itself and demand.’

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