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Robust plans to buy and build more affordable homes

Plans to build and buy more affordable properties, as well as improvements to the monitoring and reporting procedures for our Right To Buy income and Housing Revenue Account (HRA) programme, are included in the first report from our Right To Buy Review Executive Working Group.

The report, which was presented to our Executive on Tuesday 23 March, has been written to prevent us having to repay more Right to Buy (RTB) receipts to the government after we repaid £2.7m at the end of 2018-19 and during 2019-20.

The payments were made because we didn't build enough houses to use all of our RTB income within the previous deadline of three years. We identified housing schemes and properties to spend the income on, but they were not enough.

Councils now have five years to spend these receipts, following the announcement by Secretary of State for Housing, Communities and Local Government, The Rt Hon Robert Jenrick, MP, on Friday 19 March, to extend the period from three years. This means that our RTB receipts from 2017-18 must now be spent by 31 March 2023.

The announcement also increased the percentage of the total cost of replacement housing which can be funded by RTB receipts from 30% to 40%.

Claire Morris, Director of Finance says:

"The Executive Working Group has already made substantial progress. We have worked as quickly as possible to mitigate the risk of making further repayments of our Right to Buy receipts. The proposed governance improvements will allow us to highlight any potential problems in advance and give Councillors complete clarity on how that money is being spent.

"We have also identified new locations and opportunities where we can spend this income, which should create enough different developments to prevent delays to one project having a major impact on our overall expenditure.

"These repayments do not affect our residents' Council Tax bills as the charges are not included in the cost of providing services to the borough."

Auditors KPMG will begin an independent report on our HRA monitoring and the timely use of RTB receipts in April, with the results expected in May. It will be reported to our Corporate Governance and Standards Committee in June.

Our report has identified several existing developments which can be transferred to the Housing Revenue Account and therefore allow 40% of the cost of affordable housing developed within the scheme to be funded by RTB receipts. These include Guildford Park car park, the redevelopment of which will now be solely for housing rather than the original plan to retain some car parking spaces. Subject to approval from the Secretary of State, part of the Weyside Urban Village development at Slyfield will also be moved into the HRA.

We will increase the number of properties we buy, either through buying back those previously sold under the Right to Buy scheme or working with developers to buy properties within a new development before they are built. We are also researching software used by other Local Authorities to identify suitable properties.

The statement by The Rt Hon Robert Jenrick, MP, introduced new limits on the percentage of total spend on affordable or social housing which can be spent on buying back existing properties. This is 50% in 2022-23, 40% in 2023-24 and 30% in 2024-25. This means that we must ensure that we have enough building schemes scheduled to spend our RTB receipts in these years.

We are adding £2.2 million to our approved Capital Programme from HRA reserves to increase our acquisition budget for 2021-22. £13.5 million of our General Fund Capital Programme for financial years 2022-23 and 2023-24 may also be moved to our Housing Investment Programme to allow us to build more properties. Any residential developments in our Guildford Economic Regeneration Programme could also be moved to the Housing Revenue Account.

We are looking at the possibility of providing grants from our RTB income for Housing Associations to build affordable properties for us, as well as working with other councils to build houses outside of our borough boundaries.

Financial monitoring reports to our Corporate Governance and Standards Committee, and Council budget reports to our Executive, will now include details of the expenditure on new houses needed to avoid further repayments of our RTB income in each future financial year. Our Major Projects Programme Board will also be reinstated and given wider powers.

The government's Right to Buy (RTB) Scheme enables those who have been a local authority or housing association tenant for at least three years the chance to buy their rented home at a discounted price.

Before 2012, Councils were only allowed to keep 25% of capital receipts generated by this scheme, with the government using the other 75% to fund national housing programmes through Homes England. Since 2012, Councils have been able to keep all of their Right to Buy income providing it is spent on new affordable housing or related transaction costs.

Published Wednesday 24 March