Council Transfers of Housing Stock on the increase

Councils hoping to use a debt write-off scheme to complete stock transfers face an ‘unrealistic’ race against time to tie up the deals.

The government is offering to write off debt on the stock’s housing revenue account to allow the transfers to go ahead, but the offer expires on 31 March 2015.

Long-awaited guidance issued on Tuesday by the Communities and Local Government department estimates the stock transfer process will take up to 60 weeks to complete. Effectively this leaves stock-owning authorities with just three months to get deals off the ground.

Salford, Gloucester, Lewisham and Durham councils are currently considering stock transfers but, according to sources close to the deals, would need a government write-off of ‘hundreds of millions of pounds’ to make up the difference between the value of the homes and the debt.

The sources said they had expected the guidance ‘months before it came’, and had not been given a reason for the delay.

Jonathan Hulley, a partner at law firm Clarke Willmott, said: ‘The timescale is unrealistic given the critical issue of consultation. As lawyers we would never say it’s impossible, but it is certainly unlikely.’

The financial risk in the event of a delayed transfer falls to the council, the guidance says.

Catherine Hand, a partner at law firm Trowers & Hamlins, said clarity on how much debt the CLG would be prepared to write off was needed. ‘If local authorities rush the consultation process with tenants we’ve seen ‘no’ votes result in the past,’ she said.

Lewisham Council, which is considering transferring 13,000 homes to its arm’s-length management organisation Lewisham Homes, may not be far enough along to complete the deal in time, Robert Beiley, a partner at Trowers said.

Salford Council hopes to transfer 8,500 homes to its ALMO Salix Homes. Peter Styche, chair of Salix, said: ‘Our plan has been modified because of the delay in getting the guidance, but we are confident we can do it.’

Durham Council faces a race against time to transfer 19,000 homes to three providers, while Gloucester Council is seeking to transfer 4,200 homes to ALMO Gloucester City Homes.

One hundred and seventy-one English Councils took on £21 billion of debt under self-financing reforms in April 2012, but, in many cases, this meant transfers would not be possible without support to clear the debt.