COUNCIL housing in Cheltenham is set for a "cash bonanza" after an unexpected Government windfall.

Borough bosses discovered they would have more than £1 million more than they originally estimated to spend on improving housing.

The extra cash will be used to build more homes and improve areas like St Paul's.

Rebuilding at Cakebridge Place and several other garage sites could also be funded by the cash.

Cheltenham Borough Council wants to use the money to fund a programme of social housing developments. Measures to reduce antisocial behaviour, including clearing alleyways and tidying old fencing, form part of the plan.

Cabinet member for finance, John Webster, welcomed the news at the meeting this week.

"We have a cash bonanza which historically we have only been able to dream of," he said.

A revamp of council coffers means the borough will have £13.8m to spend over the next 10 years, rather than the £12m they expected.

The money will materialise once council chiefs finalise an agreement to buy their way out of the current housing revenue system using a loan from the Public Works Loan Board.

At the moment, rent from Cheltenham housing goes into a national pool and the borough receives a proportion of this back. Under the new scheme, it will retain all its rental money.

As well as getting more from cutting ties with Government, the council will benefit from changes made to the debt owed.

Mr Webster said: "Originally we calculated that there was a debt of £38.4m to buy our way out of the subsidy system.

"This has been reduced to £27.4m. This means we have more money available to improve local services."

Mr Webster said the council planned to spend the money on new builds, working on current stock and service improvements.

Top of the list of priorities is starting phase two of the development at St Paul's and building homes on derelict land.

A revamp of local government finances will free around £12 million for Cheltenham over 10 years. Some of this money is expected to be used to build on Crabtree Place in St Paul's. This is a £2.5m scheme to build 24 rental and 32 sale homes.

The news has been welcomed by Margaret Aubrey, a Cheltenham Borough Homes tenant who used to live in Crabtree Place. She said: "It must be a good thing for us if they're spending money round here."

Deputy chief executive of Cheltenham Borough Homes, Paul Stephenson, welcomed the Government's announcement.

He said: "It's great news for Cheltenham as any additional money will be used to develop and maintain housing stock."