Out-Law News 1 min. read
16 May 2012, 2:33 pm
The amended agreement follows criticism from local authorities that they needed more time to reinvest the funds from sold council homes into building new replacement affordable homes.
"Councils now have a "prime opportunity" to refresh their housing stock and help meet the housing needs of hard-working families currently languishing on the waiting list," said Shapps.
Councils will have three years to reinvest the funds from homes sold under the Right to Buy model and can choose the type, size and location of the new affordable homes they build according to local needs.
If councils fail to take the necessary steps to deliver new affordable housing with the funds the money will revert to Whitehall, which will work to deliver one-for-one replacement homes at a national level.
"For every extra property sold under Right to Buy we're giving councils the flexibility to build the homes they need, where they need them - or to work with us to ensure every penny raised through the scheme goes towards housebuilding. I've listened to their views, and they now have three years to make the most of the extra funds the scheme will bring," said Shapps.
Under the agreement, Right to Buy funds should account for no more than 30% of total investment in new homes, which is in place of Government funding. The remaining 70% invested in new affordable homes must come from authorities' or housing associations' own resources, which could include borrowing supported by the additional rental income.
If more than 30% of the total Right to Buy investment is spent on a replacement home, the money spent over and above the 30% allocation on a replacement home must be returned to central Government.
The money that is returned to central Government will be passed to the Homes and Communities Agency (HCA) or the Greater London Authority (GLA) for investment. Councils will be able to bid for funding for investment in affordable housing from that pot held by HCA and GLA.
