Preston council seeks £40m transfer pot before tenant vote

Preston council is to become the first authority in 16 years to secure its stock transfer funding before balloting tenants.

The only other council to do so was Salisbury, in 1989. It was one of England’s first large-scale transfer ballots but tenants voted against the move.

Preston, which plans to ballot tenants in December, wants to borrow £40m and is sorting through proposals from four banks.

It hopes getting funding offers early will avoid hiccups with the community gateway model of transfer, which it is pioneering.

The model is intended to give tenants a greater say in the running of their estates.

Peter Deacon, community gateway consultant for the council, said: “If there was going to be any major issue in finding the funding because of the new community gateway model we would need to know.

“But that’s obviously not the case as we have four major lenders who are willing to fund it and are now familiar with it at an early stage.”

He declined to name the four lenders.

The shadow board of the proposed transfer association will meet on Thursday to consider the four proposals.

Interviews with funders will take place in the next few months but the deal will not be signed unless tenants vote in favour of transfer.

The council is also seeking £30m from the government to bridge the gap between the low value of its homes and the cost of refurbishing them.

Preston hopes to be one of the first councils to use the government’s new £180m fund for negative-value transfers, announced in last month’s comprehensive spending review (HT 16 July, page 8).

Deacon said: “We are still waiting on confirmation from the ODPM on the gap funding but we have had positive discussions. We expect an answer in the next few weeks.”

Richard Williams, director at social housing consultant Beha Williams Norman, said his firm was encouraging more authorities to seek funding before their plans went to ballot stage.

He said doing this could help to reassure tenants in complex transfers that the deal was financially viable.

A recent ODPM research paper on improving the stock transfer process suggested councils should approach funders early in the transfer process in order to get the best possible advice (HT 24 October 2003, page 17).