80,000 council homes could be lost by 2020

At least 80,000 social rented homes could be lost by 2020 unless councils are given greater powers to build new homes, new analysis from the Local Government Association reveals today.

The LGA estimates this drop in affordable council rented housing would shift spending from bricks to benefits by driving up the housing benefit bill by £210 million by the end of the decade as more families move into the more expensive private rented sector.

Town hall leaders forecast that 66,000 council homes will be sold to tenants under the existing Right to Buy (RTB) scheme by the end of the decade with current complex rules and restrictions making it difficult for councils to rapidly replace the majority of these homes sold. Councils only keep a third of sale receipts to build new homes and have long argued for the ability to retain 100 per cent of receipts locally.

The LGA predicts councils could then be forced to sell a further 22,000 "high value" homes in order to fund plans to extend the scheme to housing association tenants, although this number could be higher depending on how government chooses to define "high value".

The LGA is warning that some new housing measures, such as the loss of £2.2 billion from council housing budgets by 2020 as a result of social housing rent cuts, risk making building any replacements all but impossible.

It estimates that 80,000 of these 88,000 homes sold under Right to Buy by 2020 will not be replaced as a result.

This fall would also increase rents across housing markets making it more difficult for working families to save for a deposit to buy their first home. Separate new research for the LGA by Savills shows the average first time buyer now needs a deposit equal to 116 per cent of their annual income to get on the housing ladder.

The LGA, which represents more than 370 councils in England and Wales, believes the extension of RTB to housing association tenants should not be funded by forcing councils to sell-off their social housing. Councils should retain 100 per cent of receipts from any council homes they sell and Right to Buy discounts should be set locally to reflect local house prices, it said.

Local government leaders insist this is the only way to ensure councils can replace vital homes and reinvest in building more of the genuine affordable homes our communities desperately need and which are crucial to keeping rents low, reducing homelessness and tackling council waiting lists.

http://www.local.gov.uk/web/guest/media-releases/-/journal_content/56/10180/7668062/NEWS