The document from the Department of the Environment, Transport and the Regions says that allowing more time would give new transfer associations a "better negotiating position" and should result in lower interest rates.
Of the three options, the department favours continuing the annual bidding round, but allowing the programme to run for two years instead of one.
The other two options are for an open-ended system, where schemes could be rolled over into the following year; or scrapping annual bidding altogether and allowing councils to apply for transfer at any time and complete them at their own pace.
The paper says all the options would avoid the current bunching of schemes late in the financial year which makes the logistics "extremely difficult" and adds to staff costs as well as meaning potentially higher rates.
The plan marks another attempt by government to make transfer a more attractive option for councils.
Transfer specialists have admitted that lenders have got away with setting higher rates because of the tight turnaround.
Director of HACAS exchequer services Rachel Terry said: "To be honest funders took advantage of the position. They could set the rates they wanted, if some of the schemes had more time they could have got better rates. They have got to get way from the current system it is not at all sensible."
She favoured the open ended options and claimed there could still be bunching of schemes at the end of two years.
But Sector Treasury Services director Mike Roche favoured the two-year deadline. "If they were allowed to go on indefinitely it could become too protracted." He suggested that penalties could be set within the two years to ensure that schemes did not bunch at the end of the year.
He also admitted that some of the schemes in the past could have got better rates, if they had had more time to attract lenders.
Source
Housing Today
No comments yet