[KF] Housing Minister Grant Shapps said that the Government is committed to giving councils more financial freedom to deliver a better deal for the 4 million people living in council housing.
Describing the current system of council house finance as a mess, Mr Shapps said the Coalition Government would review the unfair Housing Revenue Account subsidy system.
The Minister said he wanted to see a more transparent system that devolved more power to councils to better meet the housing needs of the communities they serve.
As a first step, Mr Shapps pledged to continue the consultation on changes to a self-financing system already under way. He urged councils and other partners to respond to this, so that he could get a comprehensive assessment of the options currently on the table.
Following thorough analysis of responses, the Minister will then announce whether the current proposal will be taken forward in part or in full, or whether an alternative model will be considered.
The current consultation on changes to the Housing Revenue Account subsidy system proposes replacing it with a new self-financing model, where councils keep all the rent they collect from their homes and all receipts from any sales of houses or land. In return councils would take on some additional housing debt.
The current consultation is open until 6th July 2010.
Government Will Overhaul Council Housing Finance System
Latest figures from the Tenant Services Authority (TSA) show that the regulated housing sector has retained the confidence of major lenders with £3.5 billion new funding arranged in the last financial year, of which £1.5 billion was put in place in the final quarter.
Investors in the capital bond markets also continue to see the sector as a sound investment, with bond issues contributing almost £1 billion to the total figure.
This means that 99% of the money required by housing associations to fund business plans, including building new homes, over the coming 12 months is already in place.
The latest quarterly survey (January-March 2010) also shows that:
TSA Interim Director of Regulatory Integration Jonathan Walters said:
"Housing associations continue to hold the view that the finance and housing markets are stable or improving. The continued access to funding to finance their business requirements, increased interest from prospective buyers and demand returning to the housing market are the main factors contributing to this view.
"However, there are still some challenges - accessing mortgages for shared ownership, the fact that deposits remain high for prospective buyers and the risk of repossession if unemployment increases."