SELLING off Worcester's council homes to a private landlord is the city council's only option if it wants to stay in the black.

Chris Woods, director of auditors HACAS Chapman Hendy, told a housing board meeting the alternatives of keeping its 5,085 homes or transferring the management of the properties to an "arms-length" company were non-starters.

Around a dozen worried tenants gathered at last night's meeting to see how the future of their homes was shaping up.

Ronkswood resident Jon Baddeley urged councillors and tenants to lobby the Government on its sell-off policy.

Mr Woods told the meeting the council's housing stock would make between £15m and £20m if it was sold off.

The figure - £20m lower than that predicted by auditors KPMG a year ago - takes into account £59m of repairs needed over the next 10 years.

But the move, which could be completed by March 2003, would mean the authority would have to apply for a place on the Stock Transfer Programme and go cap-in-hand to the Government for an overhanging debt grant to cover the shortfall.

The "arms-length" management company option was ruled out because the council does not perform well enough in the Government's eyes to borrow extra cash to invest in repairs.

And keeping the housing stock would leave the council with a £32m shortfall, he said.

But transferring stock to a new landlord would mean existing tenants retaining the right to housing benefit and the right to buy.

"New tenants would only have the right to acquire - similar to the right to buy but far less generous," said Mr Wood.

But he warned a new Government ruling meant rents would rise whichever option was accepted.

His estimate put the rise at 20 per cent over the next 10 years. Existing council tenants would see a gradual rise from around £50 a week to £66.

6 Opinion: P12