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Social Housing Green Paper: The Financial Implications for Local Authorities

Briefing Paper

The Ministry for Housing, Communities & Local Government finally published its Green Paper on Social Housing on 14th August 2018. Entitled ‘A new deal for social housing’, the Green Paper is wide-ranging and includes five chapters as follows:

  • Chapter 1 – Ensuring homes are safe and decent
  • Chapter 2 – Effective resolution of complaints
  • Chapter 3 – Empowering residents and strengthening the Regulator
  • Chapter 4 – Tackling stigma and celebrating thriving communities
  • Chapter 5 – Expanding supply and supporting home ownership

The government has also published a consultation paper alongside the Green Paper on ‘The use of receipts from Right to Buy sales’.

The Social Housing Green Paper has been long-awaited and has finally been published during the Parliamentary summer recess. It addresses a range of housing issues but from the point of view of local authority housing finance the main implications are the proposed changes to the way in which new council housing is supplied and the proposed new flexibilities in the use of capital receipts from ‘right to buy’ sales.

Local authorities have welcomed most of the proposals, not least the abandonment of the policy of obliging local authorities to dispose of high value council homes and the additional flexibilities around the use of capital receipts. However, local authorities also complain that the Social Housing Green Paper does not address the fundamental problems that prevent them from building more council homes and increasing the stock of social housing.

Since 2012, local authorities have consistently argued that the ‘borrowing cap’ should be either raised significantly or abolished thus allowing them to borrow to fund the building of new council homes. The government’s response has been to offer a limited scheme to raise the ‘borrowing cap’ for specific schemes that address housing need only in areas that the government consider to be under significant housing pressure – and this scheme had already been announced before the publication of the Social Housing Green Paper.

Ever since the introduction of the ‘Right to Buy’ in 1980, local authorities have been unable to replace the homes that have been sold with new council homes. In 2012 when the reinvigorated ‘right to buy’ scheme was introduced the government stated that it would ensure that the additional council homes that would be sold would be replaced on a ‘one-for-one’ basis, but in practice this has not occurred. Many in the sector would like to see the ‘right to buy’ reformed so that it would no longer lead to a net loss of council housing stock, but the Social Housing Green Paper does not include any proposals of this nature.

Neither does the Social Housing Green Paper propose any increases in the affordable housing programme. Consequently, the Social Housing Green Paper is seen by many in the sector as a missed opportunity.

This briefing paper focuses on those aspects of the Green Paper that have implications for local authorities and for finance, especially those that relate to expanding supply and supporting home ownership; and on the consultation on the use of receipts from Right to Buy sales. This briefing paper summarises those issues and the reactions of the sector as well as providing some commentary.

The consultation on the Green Paper is open until 6th November 2018 while the consultation on ‘The Use of receipts from Right to Buy sales’ closes on 9th October 2018.

To view or download your copy, please click here.

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