Government announces new self-funding social housing finance system

The government has announced details of a new self-financing social housing system which will allow councils to keep all the rent they collect and all the receipts from any sales of houses or land.

The new scheme will replace the HRA subsidy system which presently funds council house building in 177 local authority areas. The government claims will release at least 10% more money in every council for maintaining and managing their homes and create the funding capacity to build over 10,000 new council homes a year.

In return, councils will accept a share of an additional £3.65bn debt, although the housing minister John Healey said that no council will be asked to take on unsustainable levels of debt. Tenants whose homes have been upgraded through the Government's Decent Homes programme will be given the guarantee that their homes will be funded and maintained to this standard, with enforcement being supplied by the Tenants Services Authority (TSA).

John Healey said: "This is a once and for all settlement between central and local government. It will bring council house funding up to date - replacing a system which was introduced before the Second World War. Councils will get the freedom to fund and run their council homes, without central Government subsidy. Not a single penny from rents or sales will go to Whitehall and not a single penny will subsidise other councils as the current system dictates.