This House of Commons Library briefing explains proposals to extend the Right to Buy to assured tenants of housing associations on a voluntary basis. No implementation date has been announced although a pilot scheme with five associations is underway.Jump to full report >>
The statutory Right to Buy (RTB) was introduced in October 1980. To date, just under 2 million council properties in England have been sold. As a general rule, assured tenants of housing associations (aside from those who were previously secure council tenants with a ‘preserved’ RTB) do not have the RTB on the same terms as council tenants.
The Conservative Party’s 2015 Manifesto contained a commitment to “extend the Right to Buy to tenants in Housing Associations to enable more people to buy a home of their own.” Subsequently, the 2015 Queen’s Speech announced that a Housing Bill would be introduced to “dramatically extend the Right to Buy to the tenants of Housing Associations – putting home ownership within the reach of 1.3 million more families.”
While welcomed by housing association tenants who have long sought the RTB, the measure is controversial and has generated strong reactions from social landlords. Local authorities are concerned that the measure will be paid for, in part, by the sale of their most valuable (vacant) stock. Commentators have questioned whether sales of vacant council stock will generate sufficient funding to pay for an extended RTB. Housing associations questioned the legitimacy of legislating to force the sale of assets owned by charities/not-for-profit companies.
The National Housing Federation (NHF) put an offer to Government in September 2015 in which it proposed the implementation of an extended RTB on a voluntary basis. This offer was described as a compromise with a view to securing the independence of housing associations and the best deal on compensation (for discounts) and flexibilities (the ability to refuse the RTB in relation to certain properties). During his speech to the Conservative Party Conference on 7 October 2015, the Prime Minister announced that agreement had been reached on the NHF’s offer, and that the first housing association tenants would be able to buy their homes in 2016. It was subsequently suggested that the extended RTB might be phased in. During the Autumn Statement and Comprehensive Spending Review 2015 the Chancellor announced that the extended RTB would be piloted by five housing associations. These pilots are now underway; they will run to January 2017 but an evaluation report is due in September 2016.
No implementation date for the extended RTB has been announced. Tenants interested in being kept up to date on progress in developing the extended RTB can sign up here.
Negotiations on the detailed implementation of the voluntary RTB are ongoing; an Implementation Advisory Board has been established as well as a Sounding Board made up of representative bodies. All recommendations made by the Sounding Board are subject to a final ministerial decision. A framework document will be published in due course which will set out how the policy will work in practice.
On 5 April 2016 the NHF published two briefing papers: one setting out the key principles of the agreement to implement a voluntary RTB scheme for tenants who are not currently eligible, and another on the policy development process. This document clarifies that decisions over which properties may be exempt from the voluntary RTB will be left up to each housing association’s board. A further NHF briefing paper was updated with the latest developments on 17 June 2016.
The Housing and Planning Act 2016 does not contain measures to implement a statutory RTB for housing association tenants. The Act does, however, contain measures that will require English local authorities to make an annual payment to Government in respect of the expected sales of “higher value” vacant stock over the year. These payments will be used to compensate housing associations for selling housing assets at a discount to tenants. The Act also provides for grants to be paid to associations to cover the cost of RTB discounts.
The Government has said that the properties sold under the voluntary scheme will be replaced on a one-for one basis; however, this has raised questions around how replacement will be financed; the timing of replacement (there will always be a time-lag); and where the replacements will be built. In London, in certain circumstances, there will be a requirement to secure the development of two affordable homes for each dwelling sold. Comparisons have been drawn with the existing commitment to replace properties sold since the discount levels were increased in 2012. RTB sales increased from 2,638 in 2011/12 to 12,246 in 2015/16, while the total number of dwellings started on site or acquired since 2012/13 up to and including the fourth quarter of 2015/16 was 6,526. The replacement properties are let at affordable rent levels of up to 80% of market rents (i.e. they are not like-for-like) and there is no requirement for the replacement properties to be built in the same area.
The extension of the RTB to housing association tenants was the subject of an inquiry by the Communities and Local Government Select Committee over 2015-16. The Committee’s report expressed support for the Government’s aspiration to extend home ownership and increase housing supply, but concluded that there are “unresolved issues” and said they “remain concerned that the Government’s policies could have a detrimental effect on the provision of accessible and affordable housing across all tenures.”
The Public Accounts Committee (April 2016) has also criticised the lack of information on “the potential impacts of the legislation required to implement this policy.”
Commons Briefing papers CBP-7224
Authors: Wendy Wilson; Alex Bate; Cassie Barton; Richard Cracknell