Housing reforms set to benefit local councils
Councils could gain control over £300 billion of rental income over the next 30 years under housing reforms set to come into place in 2012.
The new Housing Revenue Account (HRA) reforms would also give councils the capacity to build up over £50 billion of new investment capacity.
The reforms have been proposed due to widespread dissatisfaction at the current system, which gives councils no certainty as to how much funding they are set to receive, often meaning they are unable to manage their housing stock properly.
The new system would allow councils to keep any revenue generated from rental income, and they will then be able to autonomously decide how to allocate the money to meet their needs. In return, councils will be allocated a share of a £28 million debt, which they will be in charge of managing.
These reforms should now encourage councils to develop a medium to long-term business plan influence by investment need and integrated with sustainable and robust funding solutions.
Neil Austin, director at PWC Newcastle said:
“ We have sought to identify the full potential of the reforms – which could be very significant indeed. In practice councils will need to take a prudent view of their ability to increase rent levels and manage their costs before they are in a position to identify the investment resources that will be available to them.“