Council tenants will be consulted on proposals that would allow St Albans City and District Council to retain rental income and money from the sale of council housing to use to manage their housing stock, following a meeting of Cabinet on 1 June.

Their input will be used to help the Council formulate a response to a consultation paper, Council housing: a real future, which was published by the former Government in March and which includes proposals to reform the way that council housing is funded. The new Coalition Government has said that it will review the current system of housing finance, but has not withdrawn the previous consultation or published any specific proposals of its own so the Council is having to continue to prepare a response to the paper’s recommendations by 6 July 2010.

The consultation paper proposes that councils are allowed to keep:
·        the rent form council houses;
·        the money received from selling council houses to tenants through the “Right to Buy” scheme;
·        the money made from the sale of land.

Currently over 40% of rental income from Council tenants is paid to central government in the form of an annual payment, which for St Albans City and District Council amounts to £9.9m for the financial year 2010/11.

Under the proposals, the annual payment would cease and the Council would be allowed to retain rental and other income from its housing stock, in exchange for assuming responsibility for a one-off increase in its housing debt to £181.4m which will be paid to the Government. The extra rental income kept by the Council would assist in meeting interest payments. However the Council would not be allowed to increase this debt and borrow more money. The Council’s allowances for managing and maintaining the housing stock would increase by 11.2%. The proposals will not affect current rent policy under which local authority rents are increasing so that they become the same as those charged by Housing Associations by 2015/6.

At the meeting on 1 June, Cabinet heard that a preliminary assessment of proposals by officers, has however shown that the new capped level of housing debt would not allow the Council to borrow enough money to maintain its housing stock in good condition and that this would lead to a backlog of unfunded work and the Authority’s liability to meet the Government’s Decent Homes Standard.

Cabinet agreed that council tenants and leaseholders of homes formerly owned by the Council would be consulted on the proposals before a final report is presented at a special meeting of Cabinet on 29 June. It is expected that the Council will respond to the consultation by the deadline of 6 July.