£7m rent cut may lead to fewer affordable homes
PUBLISHED: 08:20 13 August 2015 | UPDATED: 08:20 13 August 2015
Whitehall moves to ease the burden on the poorest households by reducing their rent could leave the district council £7million out of pocket.
District bosses have accused ministers of ‘moving the goalposts’ and they say the plans would affect their ability to build or buy up to 66 new council homes, writes David Beasley.
East Devon District Council (EDDC) is complaining that a one per cent rent reduction in each of the next four years would deprive them of the equivalent of a third of their annual income by 2019/2020.
EDDC is landlord to 4,245 council homes, including 1,185 in Exmouth, 519 in Sidmouth and Sidbury, 75 in Newton Poppleford and 214 in Ottery St Mary.
And around a quarter of their tenants pay less than £82 a week.
Councillor Jill Elson, EDDC’s portfolio holder for homes, said that the plans were contrary to an agreement made with ministers in 2012, that the council would take on £84.5million of debt in return for the freedom to run its council homes ‘free from government interference’.
She said: “The debt was based on the Government’s assessment of income and expenditure over 30 years, and three years into that arrangement, the Government is proposing to move the goalposts.
“While a one per cent reduction may seem good news for existing tenants, we may not be able to carry out the kind of maintenance on properties as we do now.
“We have invested £9million each year on the repair and improvement of tenants’ homes over the last three years. It would also affect our future tenants too, as the rent income we are at risk of losing, equates to being able to provide 66 new affordable homes.”
She said EDDC has a 30-year business plan to ensure that it is able to maintain its properties.
The cut, she said, could mean EDDC’s ring-fenced housing revenue account would reduce by £77.2million over the next 30 years, making the plan unviable.
“This is very short-sighted and this policy has tough consequences on us, as a council, and on tenants too,” she said.
“We need to secure a more effective balance between the needs of present and future tenants in the longer term.”
The council is hoping to meet with MPs in the next few weeks.