Irresponsible Lib-Dem spending – and higher rents for new Council House tenants

The LibDem Administration at Colchester City Council is pushing ahead with its £100m debt-fuelled housing acquisition programme despite the higher interest rates which make it financially unviable.

It says it will insist that all tenancies for new acquisitions will be “affordable” rather than “social”.  The difference is important because affordable rent means a 20% discount to market rent, whereas “social rent” which means bigger discounts averaging 50%.

But the Administration is continuing with its other historic appraisal assumptions.  They assume that long-term interest rates are still at 3% rather than 5% and that rents will rise faster than costs – small percentages that make a big difference over 40 years.

Councillor William Sunnucks, Conservative spokesman on Council Resources, said: “The Council will run out of money if the Lib-Dems carry on like this.  They are charging tenants more rent to try to plug the viability gap. 

But they still haven’t come to terms with interest rate increases and they admit that they don’t understand the viability assumptions which they have just approved."