Lifelines open for inner cities

The DTLR has asked the Treasury to consider the social housing sector’s ambitious housing market renewal fund, and to write off crippling breakage costs for English transfers, Housing Today has learned.

Housing minister Lord Falconer has called an important summit meeting next week to discuss measures to prop up failing housing markets, with deputy prime minister John Prescott likely to attend.

It is understood the meeting, hosted by Leeds council, will see Falconer join forces with councils, social landlords, private developers and lenders, to look at ways to channel funding.

This could involve the market renewal fund, which housing experts estimate may need to be as high as £800m a year for a decade (Housing Today, 15 November).

And senior housing sources confirmed this week that the DTLR has made a bid to the Treasury for funds to scrap breakage costs on fixed-rate loans worth hundred of millions of pounds owed to the Public Works Loan Board.

They estimate that at least £250m is required to help embattled metropolitan councils overcome this problem and deliver viable stock transfer plans (Housing Today, 20 December).

This is intended in part to help inner city councils raise sufficient transfer prices by meeting the cost of ending current fixed-term debts.

But the timing of a concession will be crucial, councils say. Addressing loan redemption in this summer’s comprehensive spending review could come too late for some. Birmingham council, with loan redemption costs exceeding £100m, plans a March ballot and could conclude transfer before the summer.

Other councils would benefit, such as Sheffield, with a record breakage cost of more than £150m.

A spokesman for the DTLR said that Birmingham had reached a “sufficient” minimum valuation.

He said the department could not act on breakage costs at this stage, but was aware of the issue.

The council’s director of housing, David Thompson, said that if interest rates fell further, Birmingham’s £244m valuation could be “vulnerable”.

He remained optimistic that government was listening, he said. “Council members are exercising the government on the issue. We have observed the relaxations in relation to Glasgow and put this to central government.”

Gwyneth Taylor, programme manager for housing and asylum at the Local Government Association, said: “The government has a planned programme for transfer. But it is not feasible unless they sort this out.”

Leading players involved in the overall renewal fund proposals are setting their sights on July’s comprehensive spending review, which would release funds next year. They are negotiating for as much local autonomy as possible. One said: “We want to get cash into these areas of need as soon as possible. But it has to be the right package.”

Birmingham, Burnley and Liverpool case studies and costings are already on the table. However the government is keen to respond to the reports on race disturbances in northern towns.