Attended a very interesting presentation yesterday on how changes to the way social and local authority housing is financed will work in practise. Previously government creamed off a percentage from Housing Revenue Accounts (into a central Housing Subsidy Fund) and gave some of it back as housing subsidy - which is the point I've made all along that the running costs of social housing are NOT subsidised by the tax payer, but would be covered by rents if the government didn't take a percentage to then return in part as subsidy. Under the new system....the government will still take a percentage of rent into a central fund but there will be no housing subsidy. Instead government will write off part of current debts (incurred from capital programmes mainly) and then tell local authorities how much they can borrow each year and take the revenue out as interest on the debt. The reassuring thing is that for existing tenants there will be no massive rent hike. Those rents and their annual increases are protected. It will be for Local Authorities to decide if they want to go down the road of higher rents for new tenants (and there might be pressure on them to do so if the calculations made by central government on what they can borrow compared to housing revenue don't add up) but even in that scenario, beyond 2015 those rents can only rise a maximum of 1% above inflation year on year. In reality this means that the bulk of social housing rents should remain as they are, with their annual levels of increase also protected to 1% above inflation. The real problem under the new financing strategy is that 'decent homes' funding is woefully low and the scope for new builds is gloomy too. The government want 150,000 new homes built but expect the bulk of the finance to do that to come from LA's themselves, from the housing revenue accounts (which cover running/ maintenance costs), and from borrowing (although they will tell LA's how much they can borrow and they won't be able to borrow any more). In the words of the accountant giving the presentation last night.....they want more homes built while leaving less money in the system to do so.