Magazine article Public Finance

Councils Given Green Light to Expand Housing Provision

Magazine article Public Finance

Councils Given Green Light to Expand Housing Provision

Article excerpt

New homes built by local authorities will not be governed by national housing finance rules, the government announced this week

In a move that might signal the break-up of the housing revenue account, ministers said councils would be able to keep all rental income raised from new properties and retain all receipts if homes were later sold through the right to buy.

Although councils can apply for development grants in the same way as housing associations, just five - all with arm's-length management organisations - have so far received funds via the National Affordable Housing Programme.

A consultation paper, published by the Department for Communities and Local Government on January 21, admitted that the current system did not encourage councils to build because rental income was pooled nationally through the HRA subsidy system and 75% of receipts from sales were paid to the Treasury.

Housing minister Margaret Beckett said the government was determined that house building would continue during the recession. …

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