The Guildhall will spend several decades paying off enormous 50-year loans that keep central Government’s tentacles out of Northampton’s council housing stock.
The Chronicle & Echo can reveal Northampton Borough Council had to borrow £193m to incorporate statutory changes to housing finance, which required local authorities to make huge settlement payments to the Department of Communities and Local Government to buy out of the housing subsidy system, a switch that came into place in April.
The move effectively allows the borough to keep all revenues – annually about £30m – from its 12,000 properties, itself one of the biggest council housing stocks in the country.
While the Government made a low three per cent rate available, the biggest single loan of £125m will be repaid in 2062 by which time more than £9m will have been paid in interest.
A spokesman said £6m of borrowing was used to fund the council’s general fund capital programme in previous years and would be repaid by the end of 2017/18. He said the Guildhall always looked at a variety of factors when considering any loan including going for a single loan or multiple ones with different maturity dates.
Councillor Alan Bottwood, borough cabinet member for finance, said: “The Government’s decision to change the way council housing is financed has meant in exchange for a one-off allocation of housing debt, councils now have more funds available to help them improve and maintain their housing stock. Until the reforms came into force, money from council rents went back into a central pot and the amount allocated to us for improvements was actually less than the rents collected. There was nothing we could do about it. Under the new scheme all of the money from rents will be spent on improving and maintaining homes locally, which offsets the cost of the low rate loan we secured to make the one-off payment.”