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11/02/2016

MPs express concerns over Right to Buy scheme

Words: Laura Edgar
Housing / Shutterstock_227591032

The Communities and Local Government (CLG) Committee has laid out its concerns over funding of the Right to Buy scheme in a report.

The government has said it will fund the scheme’s discounts for housing association tenants with the proceeds from the sale of high-value council homes.

But the committee believes that public policy should be funded by central government rather than “through a levy on local authorities”.

Additionally, it finds the “robustness” of the funding model for the Right to Buy discounts to be “extremely questionable”, and has called on the government to set out the fully costed evidence for the proposals.

In the report, Housing Associations And The Right To Buy (pdf), the committee also calls on the government to protect rural communities and their provision of rural areas. The voluntary agreement between housing associations and the government allows for “portable discounts to be offered in place of certain properties”, said the committee.

“While the portable discount might mitigate the impact of extending the Right to Buy to rural properties, it still remains unclear how it will operate”.

The report highlights the CLG Committee’s misgivings about the 1 per cent rent cut for four years and how it “will lead to a significant reduction” in the income of housing associations. Therefore, the ability of housing associations to build new homes is “threatened” and could affect getting people back into work, among other pastoral services currently offered to tenants.

Housing Associations And The Right To Buy states that a considerable amount of the sold Right to Buy stock has been “recycled” into the private housing sector. The committee is “significantly concerned” about the potential to sell social housing at a discount only for them to become more expensive and poor quality in the private rented sector.

In response to its findings, the committee has laid out a number of recommendations for the government, including:

  • Measures to restrict homes sold through right to buy from ending up in the private rented sector need to be explored;

  • Before the 2016 Autumn Statement, provide certainty over rent levels post-2020 to help long-term businesses planning and increase investor confidence;

  • In the long-term, housing associations should be given the freedom to set their own rents; and

  • Starter homes should not be built at the expense of other forms of tenure if there is a local need for affordable rented accommodation. It is important that homes for affordable rent are built where the need exists.

Peter Box, housing spokesman at the Local Government Association, said the representative of councils agree that the Right to Buy to housing association tenants should not be funded by “forcing” council to sell of their homes.

“As a minimum, we forecast councils would be forced to sell 22,000 ‘high value’ homes in order to fund plans to extend the Right to Buy scheme. This number could be much higher depending on how government chooses to define ‘high value’. Councils should always be free to manage their assets to meet the needs of local communities and must retain 100 per cent of all receipts.”

Housing measures, such as cutting social housing rents, risk, Box said, making building any replacements “impossible”.

“This loss of social rented housing risks pushing more families into the private rented sector, driving up housing benefit spending and rents and making it more difficult for families to save the deposit needed for their first house.

Instead, Box suggested the government should fund the Right to Buy  by working with councils to raise £13 billin by building more homes on public homes. “This is more than enough to fund the extension over the long-term and would protect vital council investment in the genuinely affordable homes our communities so desperately need,” he concluded.

The full report and list of recommendations can be found here (pdf).

Image credit | Shuttershocks

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