Councils claim Government pooling of right-to-buy receipts is stifling house building

If councils were allowed to keep 100% of receipts raised by right-to-buy (RTB) sales they could unlock enough money to build more that 100,000 new homes a year, which would help to plug the housing deficit the country is facing, the LGA said.

The Government proposals to allow 100% of RTB receipts to be retained locally were suspended for at least the period of the comprehensive spending review, which runs until 2015. Under the suspension, 75% of the receipts are pooled by Government and given to the Treasury.

The Treasury’s desire to keep 75% of the sales will prevent councils from using the money to build new housing while housing waiting lists are at all-time high levels, the LGA said. It stressed that councils are ready to take action and should have the means to do so.

"Local authorities are suffering a double whammy under the new Housing Revenue Account reforms, first not being able to fully use the benefit of capital receipts and secondly having a cap placed on their borrowing at the level of the value of their stock," said Alan Aisbett, a housing law expert at Pinsent Masons. "The relaxation of one of these constraints would go a long way to easing the affordable housing crisis."

"The Treasury is preventing councils from being able to deliver as many homes as they should be able to. We could build more than 100,000 extra homes a year if we were allowed to keep all the capital receipts from the council houses we sell under RTB," said Gary Porter, housing expert at the LGA.

The Localism Act 2011 is now law and the National Planning Policy Framework (NPPF) is laid out. The LGA said that councils will need to make it work for them and the communities they represent.