One of the biggest council-owned housing companies would stop building homes if the government extended the right-to-buy to affordable properties, as mooted in the government’s housing white paper.
It would also deter private developers from funding the construction of homes through joint ventures, Barking & Dagenham LBC’s director for growth and homes John East warned.
LGC reported yesterday how affordable homes built by local authorities through housing companies could be subject to right-to-buy rules.
In 2011 Barking & Dagenham LBC became one of the first councils to set up a housing company – Barking and Dagenham Reside. It has now got more than 620 properties which it rents out at sub-market rates – anything between 50% and 85% of the market value. Several hundred more properties are due to be completed this year.
Mr East told LGC: “If government were to impose this [extended right-to-buy] it would undoubtedly affect the business model of many local authority housing companies set up.
“I think it would act as a disincentive for authorities to continue to proceed with those housing companies.
“It would also be a disincentive for the private sector to engage in joint ventures and provide the funds for the provision of new housing through local authority housing companies.
“[The policy] doesn’t seem to have a huge amount of logic to it.”
Mr East questioned whether the government could impose right-to-buy rules on local authority housing companies as they are set up as an independent body.
Despite anticipating some “very significant complexities legally to introduce” the policy, Mr East warned: “If more money goes out through the sale at a discounted price then it’s costing us [more] to build the product so we will stop building it – it’s that simple.”