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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

New government should adopt a more flexible approach to right to buy

04/04/2015


The next government should adopt a more flexible approach to the Right to Buy (RTB) scheme say councils, as a new survey shows most authorities only expect to be able to replace half or fewer of the homes they sell under it. The survey was carried out by the Chartered Institute of Housing (CIH), the Local Government Association (LGA) and the National Federation of ALMOs (NFA).

Gavin SmartGovernment figures show that about 11,260 homes were sold under the scheme between 2013 and 2014, almost double the 2012 to 2013 figure of 5,944. However, 73 per cent of councils responding to the survey feel that the current system only allows them to replace half or fewer of homes they have sold. Twelve per cent said they will not be able to replace any at all.

This hinders councils' efforts to find homes for those residents currently on their waiting lists. With almost 1.4 million households currently waiting for a home, the report argues that it is imperative that councils have the powers to replace housing sold through RTB quickly and effectively. This will allow other families in their areas to access affordable homes and keep down future housing benefit bills.

CIH, the LGA and NFA are calling on the future government to:

  • Give councils more flexibility to combine the receipts with other grants, funding and land to deliver replacement homes. Currently councils can use receipts to fund only 30 per cent of the cost of the new home and face restrictions on using land and other funding for the other 70 per cent. Councils should also be allowed to share their receipts with ALMOs (Arm’s-length Management Organisations), if they wish to.
  • Let councils retain 100 per cent of receipts from sales to reinvest locally. This would mean the Treasury forgoing the share it currently receives. There were £751 million of receipts generated by RTB sales between 2013 and 2014 and the research estimates that only about 40 per cent of that (£305 million) will be available to councils for reinvestment.
  • Allow councils to vary the RTB discount locally in some specific circumstances to set it at a level that still offers an attractive discount to tenants and provides receipts needed to contribute to replacing the homes sold.

CIH interim chief executive Gavin Smart (pictured) said: “Councils could be replacing many more homes if complex funding arrangements on the current Right to Buy scheme were changed.  By taking action now government can ensure that more social and affordable housing won’t be lost, which is vital for people on low incomes.

“Since its inception, Right to Buy has helped millions of people become homeowners but there are many more who remain in housing need. It is crucial that every home sold is replaced - a few simple reforms would give councils a real fighting chance of achieving this.”

Cllr David Sparks, LGA chair, said:

"There are millions of people on council waiting lists and local authorities want to get on with the job of building new homes that people in their areas desperately need. That is why it is so important that councils have the power and funding to replace any homes sold under the Right to Buy quickly.

"The common sense answer to this housing crisis is for the Government to allow councils to retain 100 per cent of the receipts from Right to Buy directly and give councils greater flexibility over the level of discount and how they use them to replace the homes sold."

Sue Roberts MBE, NFA chair, said: “Our report underlines the very real need to replace the homes sold under Right to Buy and ensure the money generated is channelled back into building more homes for local people. This country is currently in the throes of a housing crisis and councils need to be able to replenish all housing stock sold off under Right to Buy to ensure more people in need can benefit from affordable housing.

“Councils need to be able to replace lost social housing within their local communities so we are also asking the government to allow councils to be able to pass on Right to Buy receipts to their ALMOs, where they wish to, to allow them to get building and address the housing shortage that we are currently seeing across the UK.”


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