Part IV of the Local Government and Housing Act 1989 provides that a local authority may not enter into a credit arrangement, which includes a lease, unless an amount of credit cover is available equal to the initial cost of the arrangement.

These Regulations amend Regulation 7 of the Local Authorities (Capital Finance) Regulations 1990 so as to make further provision for the initial cost of leases of land acquired by local authorities. The main effect of the amendments is that, if specified conditions are fulfilled, leases of dwelling-houses let or occupied as accommodation for the homeless or as temporary accommodation have an initial cost, in certain cases, of nil or, in other cases, equal to the capital cost of the lease.