Extending Right-to-Buy to housing association tenants

Housing associations will be compelled to sell homes to tenants at discounts
© Paul Coleman, London Intelligence 2015

The Conservative majority government announces on Tuesday, 26 May 2015 what it calls ‘landmark changes to spread home ownership to millions of working people’.

Welcome to a pillar of Prime Minister David Cameron’s ‘blue-collar conservatism’, writes Paul Coleman.

Communities Secretary Greg Clark says tomorrow’s Queen’s Speech (27 May) includes a Housing Bill that “will offer over a million people a helping hand onto the housing ladder”.

The Bill will extend to England’s 1.3 million housing association tenants the right to buy their homes at ‘significant discounts’ similar to those offered to council tenants.

Until now, ‘Right-to-Buy’ applied only to council tenants, or to those whose homes were transferred from a council to a housing association.

“Just because you’ve signed a social tenancy doesn’t mean you should be signing away your aspiration to own a home,” says Clark.

'One-for-one'

Clark says housing association homes that are sold under this extended 'Right-to-Buy' will be replaced on a ‘one-for-one basis’.

The sting in the tail is that local authorities will be forced to fund this policy for housing association tenants.

The Housing Bill requires councils to sell their ‘most expensive housing when it falls vacant’, says the government.

The government estimates this will raise £4.5 billion a year.

Receipts from the sale of these council homes will compensate housing associations for having to sell their homes below market value - but compels housing associations to provide new ‘one-for-one’ replacement homes with the same number of bedrooms in the same area.

Uncertainty

Ann Powers, Professor of Social Policy at the London School of Economics, says: “It’s probably an unworkable policy. It’s very unlikely that local authority sales will actually fund the right-to-buy of housing association homes.”

The Institute for Fiscal Studies say the new policy amounts to a ‘significant giveaway’ to the 1.3m housing tenants across England by ‘selling public assets.  

The IFS said in April 2015 that ‘sales of expensive local authority properties would reduce the availability of social housing in the most expensive areas, thereby creating clearer divisions between areas where richer and poorer households are located’.

It added: ‘There are considerable uncertainties surrounding the revenues that can be raised from sales of expensive properties…Given this uncertainty…there is a risk that these policies will lead to a further depletion of the social housing stock.'

Significant

But Clark insists the government is “creating a level playing field”.

Any social tenant, whether in a council or housing association home, will be able to buy their home at a significant and publicly funded discount.

House building will also rise, says the government.

Housing associations will be able to use sales revenues to invest in more affordable homes.

Council housing waiting lists will be reduced.

The government says rather than one rented property, there will be two – an older home with a new homeowner, and a new replacement home available for those in need on the waiting list.

Replaced

But critics of the government say only a relatively small number of people will benefit.

They also say it will put more people in housing debt – and that even if sold homes are replaced ‘one-for-one’, most people waiting for a council homes will not be able to afford the new replacement ‘affordable’ properties.

The government increased ‘Right-to-Buy’ discounts for council tenants in 2012 to a maximum of £103,900 in London and £77,900 outside the capital – and said that sold council homes would be replaced ‘one-for-one’.

Around 40,000 council homes were sold between 2010 and 2015.

But only one in nineteen sold council homes were replaced by a newly built property.
Since the increased discounts in 2012, some 26,000 council homes were sold with just 2,700 replacements started.

Blame

Clark said on BBC Radio 4’s Today show (26 May) that ‘one-for-one’ replacement was not the objective in 2012  - that the coalition government sought only to increase the number of council homes being built rather than replace each one sold.

He also puts the blame on councils and housing associations for failing to replace sold council homes with new properties over the past three years. “There is a lag,” says Clark.

Interest

“But this new policy is to replace sold stock,” adds Clark. “Every property that is sold will be replaced on a one-to-one basis."

Clark insists the policy will increase the overall housing stock without acknowledging it could reduce the number of council homes and only – at best – maintain the existing number of ‘affordable’ homes.

He adds if housing associations fail to replace sold homes within three years, they will have to return the money with interest to the Homes and Communities Agency.

The HCA will then arrange for those replacement homes to be built.

Other detractors say the policy transfers public assets in the form of council homes and public land to private individuals and ultimately to private sector landlords and developers.

Housing associations also see the extension of ‘Right-to-Buy’ as a denigration of their charitable origins and their right to function as social housing providers. 
Some speak of taking legal action against the government to protect their assets.


The Housing Bill also includes a plan for 200,000 'starter' homes, offered at a 20% discount to first-time buyers aged under 40 - and a right for people to apply for permission to build their own homes on designated land.

© Paul Coleman, London Intelligence, 2015