'Poorer' councils to gain from new transfer policy

A paper from Department of the Environment, Transport and Regions suggests replacing the 20 per cent flat that councils pay after transfer with a progressive rate.

Under the plan, which would require primary legislation, councils with higher value stock would pay a higher levy rate of up 30 per cent. But councils that would only get a small receipt from transfer could pay lower than 20 per cent, or even pay no rate at all.

The proposal, and two other options for changing the levy, appears alongside plans on how the government wants to tackle the vexed issue of overhanging debt.

The problem, which affects a number of councils, including Coventry and Burnley in the current transfer programme, occurs when the expected transfer receipt is not enough to cover a council's housing debt.

As Housing Today revealed, the paper says ministers favour paying councils a one-off grant to cover the debt (issue 145).

The DETR is understood to be hoping to pay for the favoured one-off grant by the proposed changes to the way the levy is calculated.

Housing minister Nick Raynsford said: "We believe that this package of measures represents a key step in achieving our objective of making stock transfer a realistic option for as wide a range of local authorities as possible."

Transfer specialists welcomed the plans. Director of HACAS exchequer services Rachel Terry said: "If you try to rob the rich to help the poor it never seems fair for those authorities with high value housing stock. But you have to start thinking in that way if you are to encourage authorities to transfer with a low or negative value."

Chapman Hendy director Peter Chapman said: "The over- hanging debt issue needs to be resolved if some councils are to proceed to ballot tenants. It is important both now and in the medium term."

He claimed that a one-off grant was "by far the best option." He also welcome the proposed progressive levy rate.