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Mr Shah
#1 Posted : 31/07/2018
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Joined: 7/31/2018(UTC)
Posts: 3

We are planning to develop a scheme of 15 units where 30% of it will be funded from RTB and remaining will be borrowing from GF. I would like to know when construction is completed, could we put total units outside of HRA. Or does it have to be inside HRA?

We are also planning to purchase properties where 30% of will be funded from RTB and remaining will be borrowing.

Could this be sit outside of HRA, then lease council subsidiary who will house clients at affordable rent.


I read the guidance on RTB receipts, but unable to confirm whether assets financing from RTB receipts should or shouldn't be outside of HRA. If there are guidance, please send me the link.

Thank you.
JDorri
#2 Posted : 15/08/2018
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Joined: 2/24/2018(UTC)
Posts: 12

For the first scheme, my view would be, if the properties developed are using RTB replacement receipts, then they will be social housing as per the definition in the Agreement with government and the 1985 Act. Therefore they will sit within the HRA. The borrowing costs (ie interest) could need to be charged to the HRA in accordance with the Item 8 Debit / Credit Determination. So the General Fund may take out the borrowing with the PWLB, but it would impact on the HRA's CFR and therefore Headroom.


For the second scheme, I'm not sure if that is possible. The Agreement does not allow RTB receipts to fund developments by council controlled subsidiaries. It doesn't mention leases, but I think the intention is clearly to not allow councils to circumvent RTB by setting up companies to build council housing. Also any subsidiary would need to be a registered provider with Homes England, which is not an easy thing to achieve and can take a considerable length of time.




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