Councils should be able to rent out void homes at market rates, says London Council

Councils should have the freedom to charge higher rents, including market rents, on existing housing revenue account property when it becomes void, without being penalised through the Housing Benefit subsidy system, it said.

Although national housing policy is moving in the right direction, there are still too many "unnecessary restrictions" holding back councils from building enough much needed new homes, the Council said. 

The call on Government from LBHF has come in response to a Government backed report from the Policy Exchange think tank last week, which argued that councils should consider selling off their most expensive houses and re-investing the money in building houses in less expensive areas.

Expensive social housing which is worth more than the average property in each region accounts for 21% of social housing stock in the UK, the report said.

Around 80,000 to 170,000 new homes could be built each year if councils were free to sell of the 28,500 properties that become vacant each year and reinvest the money in building more homes, an action that is prohibited by current regulations, the report said. Around £5.5 billion could be raised every year by the sale of expensive vacant properties.

A new nationwide house building programme could be put in place if local authorities were allowed to keep all the proceeds from property sales, including Right to Buy, so they could be used locally to provide new homes, the Council said.

Other proposals made by LBHF included encouraging home-ownership and regenerating areas of deprivation and repaying debt. It said that this would generate extra resources for estate and area improvements and the acquisition of leasehold homes, which are a heavy up-front cost at the beginning of regeneration schemes.

 “Triggering more economic growth by encouraging the biggest new house building programme in a generation is a very sensible idea," said councillor Andrew Johnson, LBHF's cabinet member for housing. "But to be truly effective the Government needs to give us more freedom so the massive equity that is currently tied up in council stock can be unleashed."

"We can then reinvest the money from the properties that are sold to create many more much needed new homes on land we control. What we need is a level playing field with housing associations to be able to do this,” he said.

The Council has welcomed the recent changes to the Right to Buy regime, which included increasing the maximum Right to Buy discount to £75,000. However, it argued that in areas such as inner London this still means purchase is unaffordable for many tenants.

"The discount should take account of very high-cost areas and be raised further and this could be combined with linking the discount to a percentage of the market value of the property," it said. "Allowing tenants the right to buy a part share of their home would have the added benefit of giving many more tenants a foot on the ownership ladder."