Birmingham's housing stock is to be among the first in the country to benefit from councils' new powers to borrow large sums of money.
The council revealed on Wednesday in its housing budget that it will borrow £15m to supplement investment in its 80,000 homes over the next financial year.

Spending on decent homes, which last year was cut to allow additional spending on repairs, is set to soar from £40m to £54.7m.

The extra money will be brought in through the prudential borrowing regime that will become available to councils when the Local Government Act comes into force on 1 April.

The new powers allow councils to borrow large amounts of money provided their housing service generates enough income to meet the cost of the loan.

Birmingham will be able to borrow because the rent restructuring regime permits it to increase its rents by £2.50 per week from October 2004.

Additional income has also been generated by changes to subsidies from central government and regional housing board allocations, both of which have been favourable to the city council.

Michael Irvine, Birmingham's interim housing manager, said: "The cost of the loan will be roughly £1.6m per year. The amounts available through prudential borrowing will be factored into our options appraisal for meeting the decent homes standard."

This budget shows the city council’s continued commitment to investing in housing

Phil Murphy, cabinet member for housing

He added that the council might be in a position to borrow more in future.

Birmingham's overall housing budget increased by 11% to reach £160.8m in total.

Phil Murphy, cabinet member for housing, said: "This budget shows the city council's continued commitment to investing in housing. It will enable us to make real improvements to homes and a major difference to tenants' quality of life."

Despite the increase in Birmingham's decent homes budget, serious doubts remain as to whether the standard can be met by 2010.

Sources have estimated that at least £500m will be needed to come close to meeting the standard in time.

The council's housing revenue account business plan, which will put a figure on the cost of meeting decent homes and set out long-term investment priorities, is still being thrashed out.

Source

Housing Today