The introduction of resource accounting next year is likely to assist the opponents of stock transfers by significantly raising stock valuations.
For what it's worth
Next year, resource accounting is being introduced for local authorities. The aim is to provide a better way of demonstrating the true cost of public assets. For housing stock, it means that historic cost will be discarded and replaced by valuation based on the RICS-approved method of vacant possession - existing-use value for social housing - adjusted to reflect the fact it is rented.

However, valuation for stock transfers is based on discounted cashflow which takes into account net income over 30 years and the cost of stock investment.

The trouble is that existing-use value for social housing and discounted cashflow bear little relation to each other.

Specialist finance newsletter Social Housing has run the rule over the two methods to show the problem. It reveals that the existing-use value for social housing figure for Richmond on Thames, which is transferring its stock this year, could be £122 234 per property. Yet the transfer purchase price is just £8331.

Analysis of the 13 transfers in 1999/2000 shows an existing-use value for social housing average of £46 390 compared with the transfer purchase price of just £8579.

Without going into technical details, the Social Housing method tends to overvalue the council stock. But even if you make a big allowance for that, there is clearly a huge discrepancy between the two methods which is likely to raise a few eyebrows among council members, local tax payers and the Public Accounts Committee and give ammunition to opponents of transfer.

It also flies in the face of the DETR's aim to "bring HRA accounting procedures onto a more directly comparable basis with registered social landlords".

Transfers are also causing headaches because of the policy of holding rents down to RPI+0%. This is hitting Large-Scale Voluntary Transfer business plans and causing lenders anguish about strategy.

And you thought that housing policy was beginning to make sense?

Picking the plums
You may have spotted that Mowlem is aiming to boost its social housing operations following the Government's spending review. They are unlikely to be the only ones.

But the trick will be to pick the plums: there has been a lot of hype about the Starter Home Initiative and the boost to the Housing Corporation's Approved Development Programme but these are not all they seem. The increase in the Approved Development Programme looks dramatic. Over three years, the total amount spent will rise £892m to £2.96bn.

While welcome, the extra cash will only stabilise the number of new homes. The Housing Corporation has been set a target of 56 000 homes for rent - little changed from the number approved between 1997 and 2000.

The reason is the shift to higher cost areas such as London and the South and regeneration projects in the North, and the increase in grant rate to 60%, which is partly to help housing associations keep rents down. Without the increase, the rented programme would have declined to fewer than 15 000 approvals a year.

The existing low-cost home ownership programme will actually see a cut. Here, Raynsford expects a three year programme of 7700 homes. Yet last year alone, approvals totalled just under 4000 (a build programme of 2400 homes plus 1543 under the various incentives schemes which do not involve any development).

Effectively, the emphasis has shifted to the Starter Home Initiative to help key workers. This programme gets £250m over three years. The Council of Mortgage Lenders suggests that the programme could provide 12 500 homes - useful but hardly earth-shattering.

The best news is more resources for major repairs and improvements to council housing stock. The Chartered Institute of Housing reckons that the transfer programme of 200 000 homes each year and the extra cash should mean that the Government will achieve its aim of tackling the £19bn repair and improvements backlog within ten years.

But it does depend on that transfer target being achieved. Recently, three transfers have failed to get tenant support and organised opposition is increasing.

The restriction on rent rises is the other problem. Most experts reckon that there will be a fudge on this one - too much depends on its success. For the rest, PFI gets £760m over three years. Thus it remains a relatively small programme.

One other area that should see a boost is local authority-funded new schemes. In regions like the South West the programme is bigger than the Housing Corporation's. Receipts from the bigger transfer programme should see a boost back to the 10 000-plus level of the mid-1990s.