London Councils has expressed “extreme concern” at the Government’s decision to stop letting local authorities keep all money raised from council house sales, warning that it will undermine efforts to deliver desperately needed replacement homes.
The Government has confirmed that its policy of allowing councils to retain 100% of Right to Buy sales receipts will not be extended beyond this month into the 2024-25 financial year. This means potentially 20-25% of the funds generated from a council home sold under Right to Buy will instead go to the Treasury.
Boroughs in the capital have been urging increased flexibility over Right to Buy receipts so that every penny raised from sales can contribute towards the cost of building new social housing.
Cllr Darren Rodwell, London Councils’ Executive Member for Regeneration, Housing & Planning, said: “With London’s homelessness crisis worsening and boroughs’ temporary accommodation costs posing a critical risk to their financial stability, it’s more important than ever to invest in new social housing.
“In the capital we have over 300,000 Londoners on waiting lists for a social home, but we’re also struggling with immense pressures on boroughs’ social housing budgets and viability challenges making housebuilding increasingly difficult.
“We’re therefore extremely concerned that the Government will stop letting councils keep 100% of the money raised through Right to Buy sales. This will undermine boroughs’ resources for delivering desperately needed social housing and replacing stock lost through Right to Buy. The Government should be doing everything it can to boost boroughs’ ability to invest in new social homes — but instead we could see our funding reduced.”
London Councils welcomed the announcement in last week’s Budget that local authorities would be able to fund a higher percentage (up from 40 to 50%) of the cost of replacement affordable homes from Right to Buy sales receipts.
However, the cross-party group fears the subsequent decision on Right to Buy sales receipt retention means that boroughs will be left with less funding for housebuilding than they would otherwise have had.
Over 316,000 council homes have been sold in the capital since Right to Buy was introduced in 1980.
London faces the most severe homelessness crisis in the country. One in 50 Londoners is currently homeless and living in temporary accommodation. Recent analysis from London Councils shows boroughs are collectively spending £90m each month on accommodation for homeless Londoners.
Insufficient capital funding is a key factor holding back delivery of more affordable homes in the capital, according to London Councils. Other issues include the scarcity of land, the need for additional infrastructure investment, and construction skills shortages.
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