A council is in a race to spend millions on new social homes in a bid to ensure money raised from housing stock sales go further.

Dartford council needs to have splashed out upwards of £5m on new homes by the end of the month or face repaying funds from social house sales back to the government.

Under current legislation, cash from each council house sale – known as Right to Buy receipts – has to be spent on a replacement within three years, otherwise the unspent money must be repaid with interest.

However, the Covid-19 pandemic and ensuing lockdown has greatly impacted on the ability of local authorities to spend on and complete capital projects including housing schemes.

Originally, 34 new homes being built at three garage sites in Swanscombe – Keary Road, Gilbert Close and Milton Road – and another at an old council depot in Mead Crescent, Dartford, were scheduled to have been further along but actual spend to date has been below target.

The council says three of the four sites are now progressing well with site clearance under way.

In October, the fourth and largest site at Gilbert Close – which backs onto the Swanscombe Skull heritage site – saw permission granted to develop 14 flats and two houses on the former lock-up subject to certain planning conditions being met.

But as these new build projects do not directly relate to right-to-buy income generated for the exact same quarter period three years on, as stipulated under the government rules, the council is projecting "insufficient funds identified in the budget to match the expenditure".

As a result, it applied to the Ministry of Housing, Communities and Local Government (MHCLG) earlier this year for an extension.

This was granted and meant there was no requirement to pay back underspent funds at the end of June or September and instead the council has until the end of the year to spend these retained funds.

In order to increase spend before the December deadline, the council has increased its purchase of former local authority-owned properties, completing on seven purchases with a further 13 awaiting legal approval.

However, it is still unlikely that the full target will be met and so the council has approached MHCLG to request a further extension to the spend deadline.

If it is not granted, the council will have to repay 30% of the underspend to the government, which is currently forecast to be £169,712 plus interest.

A council cabinet meeting was held last Thursday December 10 in which members agreed to bring forward £2.208m of the new homes budget from 2021/22 to fund new home spend in 2020/21.

This is because overspend can be used against forward periods of the government's 1-4-1 scheme , otherwise known as "one for one" replacement of social homes.

During the meeting Dartford council leader Jeremy Kite said the overspend was a deliberate act for benefit of the community rather than something which would have an adverse impact on council finances later down the line.

This he added "would iron out in the wash" because it is money they won't be spending in the future.

The Tory leader went on to explain the "three-year rule" – introduced by the Tory-Lib Dem coalition government in 2012 – meant it was tough for councils to plan ahead and deliver replacement schemes.

"Central government has set up the scheme whereby when we talk about 1-4-1, it's really the money receipts we received from Right to Buy and we are allowed to disperse that money back into our housing stock," he said.

"But we have to spend it in the proportion that we acquire in terms of the numbers sold.

"Well that changes; that is not an even cash flow of money. Some months lots of people exercise their right to buy and other months... very low numbers do."

He hit out at the design of the scheme, adding: "It is really silly really when you think about it because when you try to develop a housing programme and social houses, you don't spend money the way you have to commit to it."

Cllr Kite later added: "We have a very complex housing market now in Dartford and at one end there is great demand for people who may not have the greatest income and availability to housing."

The Local Government Assocation (LGA), has called for the deadline for receipts to be repaid by councils to be extended from six months to at least five years to reflect concerns shared by local authorities around the UK.

A written question was submitted to Parliament on this basis last month in which the government replied to say "further extensions" were under consideration.

Housing Minister Christopher Pincher said: "To support local authority house building during this unprecedented time, we extended the deadline for local authorities to spend receipts arising from sales of their homes by an additional six months.

"This has enabled many of them to catch up with their spending plans and deliver replacement social housing.

"We are currently looking into requests for further extensions and will inform authorities of the outcome as soon as possible."

Dartford council spokesman Caroline Green said: "Due to the phasing of the works programme for phase 3 of the council’s new build programme approximately £3.1m will spent on the works during the final quarter of 2020/21.

"However, as the spending and/or repayment requirements detailed in the government's 1-4-1 Right to Buy replacement scheme directly relate to right to buy income for the same quarter three years ago rather than the new build projects under way now, there are insufficient funds identified in the budget to match the expenditure.

"Overall this is a very positive move and maintains the excellent progress the Council has made in increasing its stock of social housing which can be offered to Dartford people in most need"

"If not addressed, this could result in an overspend on the new home capital budget this financial year of £2.208m.

"To prevent this happening, and maintain the progress on this extremely positive programme, GAC were asked to approve bringing forward £2.208m of the budget already allocated to the building and acquiring of new homes from 2021/22 into 2020/21.

"This can be achieved by the use of 1-4-1 funding earlier than originally planned and by utilising existing balances."

Overall the council described this as a "very positive move" and says that it "maintains the excellent progress the council has made in increasing its stock of social housing which can be offered to Dartford people in most need".

It added: "It has no detrimental impact on future planned projects or on the overall council’s financial position."

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