Lib Dems call on South Cambs to suspend housing transfer process (South East Cambridgeshire Liberal Democrats)

South East Cambridgeshire Liberal Democrats <info@secambslibdems.org.uk>

Lib Dems call on South Cambs to suspend housing transfer process

January 29, 2009 5:38 PM

Today Thursday 29 January Liberal Democrats on South Cambridgeshire District Council called for the controversial plan to transfer council housing stock to be suspended in the light of concerns expressed to Parliament about housing association finances.

At the full meeting of the council Jonathan Chatfield the Lib Dem's parliamentary spokesperson for South East Cambridgeshire proposed that the current process to transfer the South Cambs housing stock "be put on hold".

The Lib Dems drew attention to grave views expressed to the Communities and Local Government Select Committee by the Housing Minister Margaret Beckett MP, Peter Marsh the Chief Executive of the Tenant Service Authority and Peter Williams Executive Director of the Intermediary Mortgage Lenders Association.

Margaret Beckett warned the committee that many banks are racking up the cost of borrowing for housing associations. The rate they have to pay to borrow money has increased from being around 0.2% to 0.3% above the inter-bank lending rate Libor to being between 1.5% and 3% above it.

Peter Marsh said to the committee that, as a result of problems caused by the credit crunch, half a dozen housing associations were presenting more risk than usual. He said: "There are six housing associations on our watch list."

Peter Williams also told the committee: "The five or so lenders that are still active in this sector at present are being very selective about what they do." The existing lending to housing associations is unprofitable. It is losing money.

Jonathan Chatfield explained:

"The cost of borrowing for housing associations is very worrying at a time when the Tory controlled South Cambs council is applying pressure on council tenants to vote to have their homes transferred to a housing association.

"At the last Prime Minister's Questions in 2008 Liberal Democrat Treasury spokesperson Vince Cable exposed the crisis facing housing associations saying the Government's funding formula for housing associations was "crippling" and six leading ones are now in danger of collapse.

"We wish to see council tenants have all the facts both for and against to enable them to make up their minds what they want for their homes.

"The Council promised that the Housing Futures project would ensure that tenants had all the facts about transferring to a housing association.

"It is clear from comments made to Parliament from those in the know that the financial position of housing associations has radically changed for the worst from what it was when the council embarked on this project in April 2007.

"We therefore call on the council to suspend its process to get up to date information and independent advice on the changed financial position of housing associations in the recession.

"To continue with the process in the light of the changed financial circumstances would be reckless and tenants cannot possibly have the true picture before them about the future financial viability of the proposed housing association landlord taking over their homes."