Proposals will discourage councils from reinvesting receipts, association says
LGA criticises ‘unrealistic’ and ‘restrictive’ right to buy plans
The government’s proposals on how councils can keep and use receipts from future right to buy sales in the local area have been labelled ‘unnecessarily restrictive’ by the Local Government Association.
The Communities and Local Government department is consulting councils over the wording of an agreement they will have to sign if they are to use right to buy receipts to deliver replacement housing in the same local authority area.
If councils do not keep receipts they will be returned to the Homes and Communities Agency or, in London, the Greater London Authority. But a response from the LGA, seen exclusively by Inside Housing, voiced several criticisms of the current drafting of the agreement.
The LGA believes the requirements are likely to put councils off keeping receipts to invest locally.
‘A number of conditions within the agreement are unnecessarily restrictive and cumulatively present a level of risk that may deter councils from reinvesting receipts in local reprovision,’ said the LGA response.
The draft agreement outlines a two-year period within which councils must spend retained receipts.
The LGA has attacked the proposal, calling it ‘an unrealistic timeframe’, comparing it to the four years that is allowed for housing providers to spend grant under the current HCA funding regime.
The response calls for a reduction in the proposed interest rate that councils will be charged on unused receipts, currently set at 4 per cent above the base rate.
The LGA also wants the CLG to allow land held by councils to be counted as part of development costs. This would help them build one-for-one replacements as they are only allowed to use receipts for up to 30 per cent of the cost of a development.
‘The broad ambition is that local authorities don’t feel they’re signing up to something that gives them more risk than they are able to take on,’ said Abigail Davies, assistant director of policy and practise at the Chartered Institute of Housing.
New right to buy rules will allow tenants to buy their homes with a discount of up to £75,000. The consultation closed last week, with an agreement expected to be in place in early May.