Information for employers and students on what the new apprenticeship changes mean for you…
Find out more >
By Lesley Lodge, CIPFA Finance and Policy Manager
There’s a great deal that councils might be able to do in the way of building more, and much needed, affordable homes or bringing their existing stock up to scratch. But finding out just what finance may be available over the long-term is no easy matter. Councillors and policy makers will be asking these questions – and practitioners will want to be confident they can provide the answers.
Housing finance had its own silent, but successful, Big Bang in 2012 with the implementation of self-financing. Councils are no longer dependent on short term funding from central government and can now plan and fund their investment in council housing over a thirty year period. At a time of austerity, and with a chronic shortage of affordable housing, this is good news. Councils that still have housing stock have a great deal of expertise and local knowledge that can be applied both to building new council homes and to improving existing ones.
The devil of course is always in the detail. And there is a lot of detail, along with a lot of complexity. What’s more, some of the key factors involved in calculating just how much money may be available for councils to build new homes or improve existing ones have changed - even in the short time since self-financing came in.
This is due to a few reasons: a significant change in rent policy is in the offing, the housing crisis and austerity in general are taking far longer than originally envisaged when self-financing was being formulated, and the financial climate meant that hopes of a borrowing cap relaxation were dashed.
There have been unforeseen problems too, with the new, transitional arrangements for depreciation and impairment. CIPFA is involved in detailed discussions with the Department for Local Government and Communities (DCLG) on possible, more workable ways forward in these areas. Meanwhile, it pays to understand the small print around those arrangements.
All of this means that councils with housing stock urgently need to give more thought to their housing finance. Some may need to revise their thirty-year business plans significantly. CIPFA’s forthcoming comprehensive guide: Housing Finance under Self-Financing can help the process. Guidance on all aspects of self-financing has been fully revised and updated to reflect the recent changes. Other topical aspects of housing finance are also covered, in clear and understandable terms to newcomers to the sector but also with detailed notes for practitioners.