Councils that account for almost 450,000 homes, in areas with some of the country’s poorest social housing stock, are likely to be affected by being unable to pay the breakage costs of their debt, which the government currently refuses to fund. Only about 10 councils are affected, but if they were denied extra help, the government could risk missing its decent homes target.
The three organisations hope their submission, made for next year’s comprehensive spending review, will be used by the government to help clear obstacles to transfer that limit what can be achieved, and where.
A survey earlier this year estimated that Islington, Sheffield and Tower Hamlets councils might be unable to pay their debt breakage costs if they opted for transfer.
In addition, Camden, Lambeth, Liverpool, Manchester and Sandwell might have negative stock values, so a dowry for the receiving organisation would be needed to make transfer feasible.
The submission also suggests that £295m would be needed over three years for dowries to aid regeneration.
Sheffield is holding talks with the Community Housing Task Force on the issue. It found that the recent cut in interest rates added £25m to its breakage costs. These now stand at £155m on top of £440m debt. Birmingham could also be affected.
Federation transfers project director Stephen Duckworth said: “The total shortfall could be £600m. We are recommending that the DTLR conduct a study to assess the broad level of shortfall which might arise.”
Institute policy director John Perry said any extra government subsidy would be well spent, because it could be used to tackle poor-quality urban areas. He said dowries were especially suitable for the single estate transfers being considered by many metropolitan councils.
“Many will go for a mixed approach. Partial transfers are very unattractive financially, but dowries have a lot to be said for them,” he said.
Source
Housing Today
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