Councils will be forced to pay in advance the estimated sale receipts of their high value properties in order to fund the extended right-to-buy to housing association tenants.
The Housing and Planning Bill, published yesterday, said each local housing authority will have to estimate the market value of any high value properties that are “likely to become vacant during the year”.
Councils will then have to pay the total sum to the communities secretary “before the financial year to which it relates,” the bill said. Payments could be made in installments, it said, although interest on the payments could be “charged in the event of late payment”.
It says councils with their own housing stock the bill states they must “consider selling” their high value stock but it does not go further than that.
However, Catherine Hand, partner in the housing regeneration team at Trowers & Hamlins described the system as “levy on local authorities”.
She told LGC: “They don’t have to sell anything but they are going to be treated as if they have sold something, whether they have or not.”
Ms Hand highlighted a clause which would enable the communities secretary to treat any housing disposed to a registered provider of social housing as though the local authority still had it.
“That’s an anti-avoidance measure,” she said. “So if you decide you’re going to get rid of your high value housing to a housing association you’re still going to end up paying.”
The bill does not contain a definition of what constitutes high value housing.
Instead the communities secretary “must” provide a definition through subsequent regulations and the term ‘high value’ can be defined in “different ways for different areas”, the bill said.
The communities secretary could enter into an agreement with a council to “reduce the amount that the authority is required to pay” if the money is used to provide housing or “facilitate the provision of housing”, the bill said.
Ms Hand said the lack of detail in it was not surprising as it was the “modern way of doing bills”. She said the subsequent need for further regulations and consultations meant there “could be an awful lot of rows” before the bill is passed into law. As a result she said there was likely to be “huge scope” for local authorities to judicially review the policy.