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New GBC Working Group To Identify and Stop RTB Income Loss

Published on: 26 Feb, 2021
Updated on: 26 Feb, 2021

After this week’s shock news that the borough council had to repay £2.7 million to the government, their new Right-to-Buy (RTB) Review Executive Working Group is to draft improvements to monitoring and reporting RTB income and the Housing Revenue Account (HRA).

The group, which holds its first meeting next week (March 1), will be chaired by:

Cllr Tim Anderson (R4GV, Clandon & Horsley), lead for Resources, with;

Cllr Caroline Reeves (Lib Dem, Friary & St Nicolas), lead for Housing and Development Control; and

Cllr Nigel Manning (Con, Ash Vale), lead for Finance in the former Conservative-led council.

Cllrs Tim Anderson (R4GV), Caroline Reeves (Lib Dem) and Nigel Manning (Con) will form the ad hoc working group.

The group will consult senior council officers to develop a more robust housing development strategy and reporting which will ensure repayment to the government is not repeated.

Auditors KPMG have also been commissioned to compile an independent report on HRA monitoring and the timely use of RTB receipts.

Cllr Anderson said: “We will also develop a system which will ensure automatic reporting and monitoring to identify repayment risks to our Corporate Governance and Standards committee, the lead councillors for Resources and Housing and Development Control, our Executive and ultimately the council.

“The payments were made because we didn’t build enough houses to use all of our RTB income. We identified housing schemes and properties to spend it on but they were not enough.

“RTB income can fund only 30% of the total cost of replacement housing, with the remaining 70% funded by ourselves.

“The number of houses built was included in a report to our Corporate Governance and Standards Committee in November 2020, but the possibility of having to return the income was not highlighted.

“The findings of the working group will be presented to the Executive on March 23 and to the council on April 13. The KPMG report is expected by June.”

Cllr Anderson continued: “There is national concern that replacement housing is not being built fast enough.

“The time frame of three years within which we need to spend the money is difficult, given that it typically takes one to two years to design a scheme and obtain planning permission and building consent.

“The Local Government Association has recommended to the governmentthat they extend the time limit to spend the income from three to five years.”

The government’s RTB scheme enables those who have been a local authority or housing association tenant for at least three years the chance to buy their rented home at a discounted price.

Before 2012, councils were allowed to keep only 25% of capital receipts generated by this scheme, with the government using the other 75% to fund national housing programmes through Homes England.

Since 2012, RTB receipts can be spent on:

  • Transaction costs involved in selling property under RTB;
  • Repaying a percentage of HRA debt attributable to the property sold;
  • Capital expenditure on new-build affordable housing, either delivered by the HRA or outside the HRA (potentially, receipts could be used by a local housing association);
  • Purchase of new-build affordable housing from developers into the HRA;
  • Repurchasing housing previously sold under RTB; and
  • Purchasing market property to be turned into affordable housing.

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test One Response to New GBC Working Group To Identify and Stop RTB Income Loss

  1. Sean Jenkinson Reply

    February 27, 2021 at 9:42 am

    It’s about time the Government stopped this RTB [right-to-buy], all it has done is left us with a shortage of affordable homes for those that can’t afford or are unable to get a mortgage, and plenty of people that have made a fortune out of it buying their home cheap and the selling it on later.

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