Local Government Association says allowing housing association residents to buy their homes could cost councils £6bn over next four years

David Cameron’s bid to extend right-to-buy to people in housing association homes has been branded unworkable on the eve of the Conservative party conference by the Tory-led body representing councils across the country.

The Local Government Association (LGA) will today publish the first independent review of the controversial policy, which finds that the policy will cost councils £6bn over the next four years, at a time of huge cuts in funding for local authorities.

Under right-to-buy, the building of replacement homes for the ones sold off by housing associations is to be funded by councils, who will be under orders to sell off their most expensive properties to raise the cash.

Today, the LGA says that it will fight the policy, insisting that by forcing councils to sell their social housing ministers will drive up rents and the housing benefits bill, while lowering their capacity to build more homes and tackle waiting lists.

The LGA further condemns a “secret” deal cooked up between housing associations and ministers. On Friday evening, the associations removed their opposition to right-to-buy on the basis that they would be able to opt out of offering it to tenants if they had a good reason to do so.

The move has bolstered ministers’ confidence that they will get the policy through parliament.

The LGA said council leaders were disappointed that the National Housing Federation (NHF), representing the housing associations, had sought to “secretly” strike a deal with the government. They said it represented “a move away from providing the genuinely affordable homes the most vulnerable in our communities need”.

Councillor Peter Box, the LGA’s spokesman on housing, warned that the offer must not be funded by forcing councils to sell their social housing. He said: “Councils are ambitious to increase housebuilding across all tenures and support measures to help people into home ownership, but this offer must absolutely not be funded by forcing councils to sell off their homes. This could result in additional costs for the government as more people move into the private rented sector and need housing benefit to afford higher rents.

“Councils should always be free to manage their assets to meet the needs of local communities and must retain 100% of all receipts to reinvest in new homes and embark on large housing and regeneration programmes.

“Rather than funding the sale of affordable homes by selling other affordable homes, councils can help the government raise money by building more new homes. We could raise £13bn by developing surplus public-sector land.

“This is more than enough to fund the right-to-buy extension over the long term and would protect vital council investment in genuinely affordable homes crucial to investment in housebuilding, keeping rents low, and to reducing the housing benefit bill.

“Giving councils a lead role in housebuilding is the only way to guarantee new affordable homes are built for future generations and the millions of people already on waiting lists across the country.”

According to an analysis by estate agent Savills, commissioned by the LGA, extending right-to-buy to housing association tenants will cost £6bn over the next four years as almost 100,000 households take up the offer.

It is forecast that 24,000 housing association tenants a year will be able to afford buy their home, with an average discount of £63,271, costing a total of £1.5bn a year.

Most tenants taking up the right to buy (91%) will be purchasing their home for less than £100,000.

The LGA said it would be asking for an urgent meeting with the NHF and ministers to ensure implementation of the scheme protected communities, councils and the government from any unintended consequences.

Under the deal struck between communities secretary Greg Clark and the NHF, the housing associations would retain control over which homes they sell, while the government has promised a one-for-one replacement for every one sold.

The funds for that would come from councils selling off properties that fell within the most expensive third of all properties in their areas as they became vacant.

A quarter of homes sold under right to buy since 2012 have not been replaced.