Letter from Housing Minister
12/07/2012
Read the Housing Minister's letter in response to some of the questions from the ministerial session at Housing 2012.
During last month's Housing 2012 conference, Housing Minister, Grant Shapps, faced some tough questions from delegates.The following letter responds to the questions from Karen Armitage who asked about one for one replacement, preserved right to buy and pay to stay.
Letter from Grant Shapps:
Thank you for your question about one for one replacement, Preserved Right to Buy and our ‘Pay to Stay’ proposals which you raised at the CIH conference on 14 June. As I promised please see below a full response to your question. As your question raised a number of points, I’ve addressed each in turn below.
One for one replacement
Drawing on evidence from the 2011-2015 Affordable Homes Programme, we are clear that it should be possible to fund new homes let at Affordable Rent levels, with no more than 30% of the cost of the new homes needing to come from the Right to Buy receipts. As in the Affordable Homes Programme, the remainder of the cost will come from borrowing against the net rental income stream from the new property, and cross-subsidy from the landlord’s own resources.
I am delighted that almost 80% of eligible local authorities have now signed up or told us they will sign up in later quarters. Where local authorities choose not to enter into the agreement, the receipts for replacement housing will be distributed by the Homes and Communities Agency, or, in London, the Greater London Authority.
Preserved Right to Buy
The Preserved Right to Buy is a statutory right for eligible housing association tenants, introduced in the Housing Act 1988. This right was introduced to ensure fairness so that tenants whose homes are transferred to a housing association through a Large Scale Voluntary Transfer would still be able to buy their home as if they had remained tenants of the local authority. There are no plans to change this.
As regards the amount of receipt a housing association receives from a Preserved Right to Buy sale, a proportion of this may be returned to the former local authority landlord in recognition that the dwelling will have been provided through loans and capital expenditure taken out by the council.
Arrangements for distributing receipts from Preserved Right to But to Buy sales between housing associations and councils are varied and depend on the local agreement made for each stock transfer. The council’s share of these receipts is exempt from the ‘Pooling’ rules, as they are considered to form part of the receipt from the original disposal. The council will be able to decide to put these, along with their other available receipts, towards affordable housing, which could include by supporting provision by a local housing association. Where receipts are shared between councils and housing associations, it is our expectation that they will work together to develop replacement homes.
Pay to Stay
The Government believes that it is not right for high income families to be paying such a low social rent when they could afford to pay more or their home used by someone in much greater need. On the proposed Pay to Stay scheme which would enable social landlords to charge a fair rent to high earning tenants, one option we are suggesting is that additional income could be used for new affordable housing so that overall housing supply would increase. This would apply in both the housing association and local authority sectors. We will be considering this proposal further in the light of views expressed in response to our consultation document.
On your suggestion that wealthy tenants are receiving a ‘double whammy’, presumably through qualifying for a RTB discount after benefiting from a subsidised rent, the discount someone receives reflects how long they have lived in their home and paid their rent, up to the new maximum cap of £75,000 and I consider this is fair. Under one for one replacement, if they do buy their home – instead of paying higher rent – a new affordable home will be provided to help households on the waiting list access affordable housing.
Download the PDF letter
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