A COUNCIL could face a damning audit report if it fails to resolve the sale of its housing stock by next summer.

Under government rules, Ribble Valley Council has until July to reach a decision on whether to sell its 1,225 council homes.

But after councillors voted to defer a decision for six months at last month's housing committee meeting, council tenants now fear the authority could miss the deadline.

The sell-off issue is due before the housing committee again in May next year.

A spokesman for the Office of the Deputy Prime Minister, which oversees the sell-off of council property, said today: "In theory, if this is not sorted out in time, the housing inspectorate could issue a black mark against the council's housing provision. That could then be taken into account when the Audit Commission carry out their next Comprehensive Performance Assessment. It could affect the council's rating overall.

"We hope Ribble Valley will make a decision in the forthcoming months."

The OPDM's stance answers some of the concerns addressed to John Prescott in a letter written by a tenants' jury panel selected to give their views on the proposed transfer.

Dismayed that councillors chose to defer a decision despite the jury voting for the transfer, Catherine Byrne, jury panel chairman, wrote to Mr Prescott demanding to know what sanctions the government could impose on the council.

She said: "We wanted to know the worst penalty the government could impose on Ribble Valley for making a late decision on selling its housing stock.

"Councillors seem to believe the sanctions are just an idle threat. The government insists Ribble Valley's Housing Options Appraisal - the document setting out the authority's decision - must be signed off by July.

John Heap, director of community services at the council, said: "Our overview and scrutiny committee is now looking at the options.

"It is expected to report back to the housing committee around March next year."