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London council to set up housing association for Right to Buy funds
Enfield Council is set to establish a housing association to spend funds it receives from council tenants exercising their Right to Buy.
At a meeting on Wednesday, the cabinet is expected to vote in favour of lending £250,000 to Red Lion Homes to cover start-up costs and transferring sites to the new association, which aims to provide 500 homes in six years.
The council first approved the idea of setting up a housing association in November 2015, as a way of using the £154m of Right to Buy receipts it has to spend between 2018/19 and 2022/23.
According to government rules, income from the Right to Buy must be spent within three years and can only fund 30% of new construction, meaning councils have to find the other 70% from somewhere else.
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Enfield, like many councils, does not have the necessary funds in its Housing Revenue Account, and is setting up this association to use the remaining Right to Buy receipts.
The government rules on the use of receipts still apply to wholly owned development companies, so Enfield Council will not have a controlling interest in Red Lion.
Other councils have also sought innovative methods to spend these funds. In July last year, Croydon decided to invest its unspent Right to Buy receipts in a charity it set up, Croydon Homes, which buys up properties and converts them to affordable housing.
Hackney Council launched a fund made up of Right to Buy receipts in August for housing associations to bid to build affordable homes. Enfield attempted this, but did not receive enough interest from associations to spend the money.
Many councils, however, have returned large portions of their receipts to the Treasury. In September 2015, Haringey Council announced plans to return all its Right to Buy receipts to the government.
