Bradford transfer rescued by Communities Plan

Bradford's stock transfer is set to go ahead next week after it became the first council to get government help with costs under the Communities Plan.

Under the new arrangements, the government will pay for early redemption fees on loans with the Public Works Loans Board when the council's own capital receipts from the transfer are insufficient to cover them. Before the Communities Plan was announced two weeks ago, the government would only cover housing attributable debt and did not pay for breakage costs above this.

Bradford's transfer faced difficulties because, although valued at £70.1m, interest rate changes meant extra breakage costs of £5.6m.

A spokeswoman for the Office of the Deputy Prime Minister said: "The announcement in the Communities Plan was that in calculating the level of overhanging debt payment, the ODPM will include the cost of the early redemption of the debt. In Bradford, they had been able to meet these costs and set-up costs from the [sale of the stock]. But the change in interest rates increased the early debt repayment costs and this meant the receipt was insufficient."

The rule change will affect all new transfers announced in this year's LSVT programme in June. But all transfers already under way – like Bradford – can apply for help on a case-by-case basis if external circumstances impact the deal. The spokeswoman said no other transfers were in the frame for assistance at the moment.

Bradford council finance director Steve Morris said he was delighted that the transfer could go ahead. He said: "[The change in interest rates] was outside our control. It could have undermined 18 months of work and we would have been hugely disappointed."

Council head of housing Geraldine Howley will become chief executive of the transfer organisation, Bradford Community Housing Trust Group. She said: "The funding was getting extremely tight and the ODPM have come to the rescue."

The council's stock of just under 26,000 homes will transfer on Monday and the group will start a £175m repairs programme.

Bradford council is investigating several projects funded by Manningham Girlington Single Regeneration Budget programme after allegations of irregular payments to local businessmen. West Yorkshire police said the council had approached them and they were considering if any offences had been committed.