The government consulted on the future of the stock transfer programme from June to September 2013; and in November 2013 issued the results of that consultation, right to transfer regulations and revised guidance for the housing stock transfer programme from 2013 to 2015. This briefing paper summarises and comments on the revised guidance with particular reference to the financial implications.
Stock transfer is the process by which local authorities transfer ownership of council houses to housing associations (also known as registered providers). The first stock transfer took place in 1988 and since then about half of England’s local authorities have transferred their stock. However, the introduction of self-financing in 2012, by increasing the amount of housing debt that councils are responsible for and by ending government subsidy for stock transfers, has resulted in fewer transfers going ahead. However, it had been expected that the government would take steps to facilitate further stock transfers especially where these are requested by residents. Councils can transfer either all or part of their stock.
The revised guidance has mainly caught the headlines because of the ‘tight’ timetable that it includes and the potential for this to undermine the stock transfer proposals that are already in the pipeline at Durham, Gloucester, Lewisham and Salford.
The delay in providing the guidance hasn’t helped with the timetabling issues and also gives credence to the suspicion that there is division within government about the future of stock transfer.
The problem is that the self-financing system has increased local authority housing debt with the result that, for a stock transfer to be viable, some of this debt would have to be written off – and Communities & Local Government has no budget to do this. However, the government still wishes to encourage stock transfer, especially where this is driven by tenants. Hence, the revised guidance that gives some hope to those who would like to transfer. However, when the details are examined it is clear that the government is still wedded to the erroneous idea that the self-financing valuation would usually represent an appropriate valuation for stock transfer purposes. It is also unclear how substantial a budget is possessed by Communities & Local Government for supporting new stock transfers. Consequently they appear to be reluctant to write off much debt and stock transfers, if they occur in future, may not offer tenants as many benefits as earlier stock transfers have done.
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