Agenda item

To consider the joint report of the Assistant Director Finance and Assistant Director Housing.

The Assistant Director Finance advised Members that on 27 June 2012 the Council signed up to an agreement with the Department of Communities and Local Government (DCLG) which enabled the Council to retain certain receipts from the sale of properties under the Right-to-Buy scheme for reinvestment in replacement affordable housing locally. The report set out the issues facing the Council in its ability to continue meeting the terms and conditions of that agreement and the options available.

Members were advised that as at June 2016 the gap between the planned investment in affordable housing and the amount it was obliged to spend based on receipts retained to date was £3.9m, increasing to £5.2m as at September 2016. The Council could consider re-paying some of the receipts it had kept, which would need to be repaid with compound interest charged at 4%. The Council would need to repay at least £1.187m to the Government plus interest. It was possible for the Council to pass over the retained receipts to another body such as housing associations, who would also need to provide match funding from their own resources or borrowing.

In passing over receipts to a housing association the Council would need to ensure that they were used for the provision of social housing for the benefit of the Authority, which meant that the housing needs to be situated in the area of the Authority or the Authority must own or have nomination rights in respect of the housing. A meeting with Housing Associations would take place in November to seek their views on the possibility of passing over the receipts.

The Portfolio Holder for Housing Revenue Account stated that, whilst he regretted the decision to hand back the monies, he supported the recommendation which would save the Council money.

The Portfolio Holder for Place commented that the Council did not have any choice but to hand back the funds and that the policy was not feasible. He proposed that the Council write to Ministers and the Members of Parliament to voice the Council’s concerns that the current policy was unworkable. This was seconded by the Portfolio Holder for Economy and Culture who also added that the Council should ask what would happen to funds when they were returned to Government.

Members agreed that the Council would write to Devon MP’s, Ministers and the Local Government Association to voice its displeasure on how the right to buy legislation was working out including the practical challenges of match funding and therefore having to return funding. The Council should circulate this letter to other stock owning Devon Authorities inviting them to also sign this letter.

RESOLVED that;

(1)        the retention of Right to Buy receipts are reviewed on a quarterly basis and the receipts surrendered to DCLG or passed over to a housing association (subject to the relevant housing association satisfying the Council that any transferred funds would be used specifically to deliver new affordable housing for the benefit of Exeter residents in housing need) should it be identified that insufficient capital investment in replacement affordable housing can be made by the Council before they would otherwise need to be returned to DCLG;

(2)        the Council write to Devon MP’s, Ministers and the Local Government Association to voice its displeasure on how the right to buy legislation was working out including the practical challenges of match funding and therefore having to return funding. The Council circulate this letter to other stock owning Devon Authorities inviting them to also sign this letter; and

RECOMMENDED to Council that:-

(3)        the Assistant Director Housing be given delegated authority to opt to surrender Right to Buy (RTB) Receipts to DCLG or pass receipts over to a housing association, subject to prior consultation with the Assistant Director Finance and the Executive Member with Relevant Portfolio, and that the Constitution is amended accordingly.