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New measures to stimulate the sale of surplus land by English councils were announced today, by Local Government Mi...
New measures to stimulate the sale of surplus land by English councils were announced today, by Local Government Minister David Curry.

From 1 January 1994, changes to the capital receipt rules will allow local authorities to offset costs of preparing land for sale before calculating the amount to be set aside for debt redemption

Announcing the new regulations Mr Curry said: 'These changes will benefit those councils who wish to sell off surplus land but need to incur costs in doing so. There are no restrictions on the type of land covered by the new regulations, which are targeted on disposals that do not qualify for European Community aid, or Government assistance through schemes such as Derelict land Grant. But we expect authorities to limit their expenditure to no more than they can recover from a higher selling price.

'The Government remains fully committed to encouraging councils to sell all surplus assets. The relaxation in the capital receipts rules during 1993 has offered a considerable incentive to such disposals. Coming into effect immediately after the relaxation, I am convinced this new concession will provide a continuing stimulus for land sales.'

Costs which could be offset against receipts include those incurred in; obtaining planning permission, preparing land for development and providing infrastructure, acquiring additional land, for example for access, and marketing.

This measure is given effect under the Local Authorities (Capital Finance) (Amendment) (No. 3) Regulations 1993.

Councils are normally able to spend 25% of their capital receipts from sales of housing and 50% in the case of most other assets. The rest must be set aside for debt redemption. Local authority debt was £37.6 billion at 31 March 1993, according to the DoE.

Under the current relaxation, authorities are able to spend in full virtually all of the receipts which come to them between 13 November 1992 and 31 December 1993. The former rules are reinstated from 1 January 1994. Extra usable receipts generated during the relaxation are estimated at £1.3 billion. Local authorities owned an estimated 56,000 acres of vacant and underused land at 31 March 1993.

The new regulations provide that, for the purposes of determining the reserved part of receipts from land disposals, the receipts are reduced by specified kinds of expenditure incurred prior to or in the course of sale, provided that the receipts have been increased by the amount of the expenditure, and excluding expenditure met by Government or EC grants.

The effects of the other measures in the same regulations are, broadly, that:

(i) Receipts from disposals of compulsorily acquired land are reduced by additional compensation payable to former owners.

(ii) When certain former council houses are bought back and then resold, the receipt is reduced by the acquisition cost.

(iii) The reserved part of the receipt from the disposal of certain shares in a Public Airport Company is reduced.

(iv) Credit cover isno longer needed when an authority become a lessee because of a boundary change, or by the transfer of a leases from a new town corporation.

(v) Leases not exceeding £10,000 in value continue to be exempt from the requirement for credit cover, provided that the total value of leases with the same company does not exceed £10,000 in the financial year.

(vi) All mortgage payments under the Rent to Mortgage scheme are capital receipts.

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