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7. Expenditure on loan charges (Charts 9 and 10)
Loan charges mainly cover the repayment of principal and interest on outstanding debt on council houses. Local authorities are budgeting to spend £196.2 million on loan charges in 2008-09. This represents a little over 19% of all local authority housing expenditure in the period. Since 1997-98 average loan charges per house have fallen from £781 per house in 1997-98 to a low of £560 per house in 2006-07 increasing to an estimated £608 per house in 2008-09. Loan charges fell by a little over 42% in real terms in the 10 years from 1997-98 to 2007-08 a real terms decrease of a little over 3.5% per year. This decrease is mainly due to the fact that most of the councils, particularly Glasgow which transferred their housing stock to housing associations had high levels of debt per house. Reductions in debt servicing were also achieved by councils who have retained their houses by using receipts from Right to Buy sales to repay debt.
Excluding Orkney which is debt free and Shetland where a significant part of the loan charges are met by housing support grant, estimated loan charges per house in 2008-09 vary from £222 per house in Angus to £1,462 per house in Edinburgh.
Chart 9: Scotland: Loan charges per house
Chart 10: Loan charges per house: 2008-09
Note:- Shetland Islands' loan charges are net of £910 per house housing support grant
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