One of the Conservative party’s main manifesto pledges before the general election was to extend the right to buy to housing association tenants in England. The pledge also included the promise to “kick start” the process within the first 100 days of a Conservative government.
The announcement to extend the right to buy was not met with applause from the housing sector as there were, and are, concerns that if proposals to extend the right to buy are rushed through with little or no proper dialogue with the housing sector this will only add to the problems.
A housing association’s housing stock is one of the factors that facilitate its borrowing and “creditworthiness” enabling it to attract private investment to generate home building. A proposal to reduce housing association housing stock could potentially attack housing associations making them less likely to be able to secure funding for future development. It is a known fact that not enough houses are being built, so how extending the right to buy will alleviate the problem is something I, and others, fail to understand.
In order to fund the policy local housing authorities will have to sell their most expensive homes when they become vacant and use the revenue to compensate housing associations for selling their stock at below market value according to the information released by the Department for Communities and Local Government. The receipts from these sales will then be used to provide new affordable homes in the same local authority area. In addition, government funding will be made available to allow one-for-one replacements of affordable homes sold .
Selling a local authority’s most expensive housing stock would for a local authority like Westminster, for example, mean most if not all of its remaining stock would be sold to facilitate this new policy (and also to make savings to comply with the further overall cuts for this economic year) potentially resulting in more social housing tenants being directed to the private rented sector.
The details of the extension of the right to buy will presumably be set out in the new Housing Bill which was announced in the Queen’s Speech on 27 May 2015 (see Legal update, Queen’s Speech 2015: public sector implications).
It seems that some housing associations intend to start a legal challenge to the policy if the trade press reports are to be believed. I hope they do because this new policy is rushed, ill-considered and based on projections that are unrealistic (the Institute of Fiscal Studies has also criticised the proposals for potentially worsening the UK’s underlying public finance position).
It seems nothing has been learnt from the long term effects of the original right to buy policy from the 1980s. If there is any “good” in the current proposal I am having problems finding it.
I absolutely agree – this policy if put into practice will have a profound effect on not only Housing Associations ability to keep building new social housing and their ability to house those in need it will leave (yet another) “black hole” in public finances.
If moves are made to implement this policy then it MUST be challenged – it is a recipe to turn the public funding crisis into a catastrophe……………..ridiculous.
I am so pleased that so many are now voicing their criticism of this ill thought out scheme.
Local authorities’ most expensive housing stock seems likely to be made up of the most attractive properties, and so likely to have the lowest turnover. It is hard in those circumstances to see how the receipts will keep pace with sales so as to fund the compensation to housing associations. It’s notable that the Government’s projected turnover rates far outstrip those put forward by the IFS. With social housing in short supply, this is a policy that can only make things worse.