Haringey hands £15m from the sale of council homes back to the government

Finance chiefs have been slammed for handing £15m from the sale of council homes back to the government instead of building new homes with the cash.

As Haringey did not manage to spend the money raised through right-to-buy sales on new affordable housing, they are now being forced to send it back.

Under new rules for all right-to-buy sales after April 2012, net receipts must be spent on replacement affordable homes within three years, or handed back to the government with interest.

In the last three years, Haringey has accumulated almost £25m from the sale of council houses. In July, Haringey sent back almost £15m to the government, as well as an interest of £980,000.

Gloria Saffrey, Director of Caris, a housing charity in Haringey, said: “This is appalling and terrible news for households (of which there are 10,000 households) waiting for secure housing in Haringey. Homeless families are forced into seeking accommodation in the private rented sector which is often unaffordable and unsuitable.

“The 15 million money could be invested to provide secure accommodation for families in temporary accommodation because of homelessness.”

The news comes as homeless charity Shelter revealed the potentially devastating impact of government plans to sell off council housing across London.

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According to the charity’s estimates, over 1,500 homes in Haringey could face a forced sale, amounting to almost 10 per cent of the borough’s council housing stock.

Cllr Gail Engert, Lib Dem leader of the opposition, has slammed the council for failing to spend the money on new housing. “We are desperate for homes - for homeless people, young families, young people. Handing money back is outrageous” she said.

The councillor received the figures after asking the cabinet what had happened to the money from right-to-buy sales.

A Haringey Council spokesperson said: “The government’s draconian restrictions on how local authorities can reinvest Right to Buy receipts have exacerbated London’s housing crisis, making it unworkable for councils across the country to build replacement affordable homes – with only one house built for every ten sold nationally.

“The current system means councils can only use these receipts to meet 30 per cent of the cost of new homes – leaving a black hole in funding at a time when budgets are being slashed by the government.

“We would obviously prefer to spend this money rather than return it to the government, and other London boroughs are also being forced to return millions of pounds that should be being spent providing the affordable housing our city badly needs.

“We’ve joined other councils to call on ministers to review this impractical system, and the government’s proposed extension of the policy to housing association tenants, which would further choke the supply of new homes in London.

“In the meantime, we’re exploring every option we have to spend Right to Buy receipts within the current tight rules, which is why last year we agreed to buy former council homes sold under the Right to Buy scheme, give funding to partner organisations building affordable homes and build our own new council housing.”