There have been repeated assertions that that right to buy sales have failed to fund the equivalent number of replacement properties.
For instance, there have been claims that only a tenth of the properties have been replaced, against a promise of 100 per cent. Much scorn has followed from the Labour Party and left wing pressure groups and media outlets, claiming that the promise of “one for one” replacements has proved worthless.
The case from the opponents of right to buy is flawed for three reasons.
Secondly, the time lag is ignored. Of course finding sites, gaining planning consent, and building new homes takes time. The Government allows a deadline of three years between the receipts coming in and replacements being required. Thus the proceeds retained by councils in 2012-13 have to be used by the end of this financial year.
Thirdly, even if a local council does fails to ensure the replacement homes are built there is a safeguard. They have to hand over the money (plus interest) from the right to buy sales to central government. Then the Government – via Homes and Communities or the Greater London Authority – will fund the replacements.
This week I am providing an update on which local authorities are on track to provide replacement homes and which ones are failing and thus are leaving central government to take on the challenge.
The immediate pressure is the looming deadline to provide replacements for the properties sold in 2012/13 – when the reinvigorated right to buy was launched with discounts of up to £75,000.
The exact terms of the “one for one” replacements varied slightly between local authorities – although here is a standard example.
There was some flexibility – for instance over the mix of one bedroom flats and three bedroom houses.
Social landlords can meet the costs of new homes by borrowing against the future rental income, contributing from their own resources – including land, and via grant funding from the Government. So that is a strong spur for councils to make use of surplus land often providing no value.
So how are councils getting on?
Let’s start today with the situation in London. I put in FOI requests to all 32 London boroughs. Not all responded and some said they had transferred their housing stock. But most of them provided answers and here they are:
13 were sold under Right to Buy in 2012/13. From 2012 to date there have been 207 sales.
None have been replaced so far but “There are 235 properties to be enabled for affordable housing planned with RTB receipts in 2015-19.” So, provided they get at least 13 of them built by April, then they won’t have to hand money back.
21 sold in 2012/13. 304 from 2012 to date.
They plan to use receipts “for 750 affordable homes by 2019”. They add “we do not anticipate that any part of that funding will be returned to the Government” – which would mean building at least 21 by April.
There were 39 sales in 2012/13. They add: “We have 3 completed properties using RTB funds with 30 properties in the pipeline”. So that does sound as though they will miss their target even if they are all built by next year. (Unless they are building properties with more bedrooms than the ones they sold.) Given that altogether from April to date there have been 345 sales they clearly need to buck up – or send a very large cheque to Brandon Lewis, the Housing Minister in future years.
56 sales in 2012/13 – and a total of 373 sales to date. They add: “We anticipate building 290 properties using RTB funds.” Also they “do not anticipate returning any receipts to government.” So that implies at least 56 new homes built by April and further new homes – in addition to the 290 currently earmarked in future years.
128 sales in 2012/13 – and a total of 719 sales to date. Thus far 21 replacement properties have been built while in terms of plans:
“The Council has planned to provide funds from RTB sales to assist the development of 80 Senior Living Units for rent at Royal Arsenal with Viridian Housing in 2015/16. The Council has planned to part fund the purchase of 20 street properties to be used as Affordable Rented Housing with Hyde Housing Association in 2015 -2016 with funds from RTB sales. Therefore, in total we would be providing 100 replacement homes in 2015-16. However, it is not yet clear whether the Hyde scheme will go ahead. Also, the properties are not new homes, although they are new to the Affordable Housing sector. The Council’s Local Authority New Build Team has a further 51 properties completing in 2015-16, which will be part-funded using Right To Buy monies and a mix of GLA grant and other internal subsidy as required.”
So that would make it 172 replacement homes by April and thus the target would be hit.
19 sales in 2012/13 – and a total of 372 sales to date. Thus far there have already been 94 replacements. There are another 200 already earmarked. But, even if no more are built by April, Hackney has already hit the target five times over.
Hammersmith and Fulham
Nine sales in 2012/13 – and a total of 185 sales to date. There have been three replacements so far with funding for another 31 agreed and “a further 172 qualifying units are also at various points of the feasibility/design stages of development. The Council is not currently anticipating that any funds will need to be sent to central Government.”
70 sales in 2012/13 – and a total of 503 sales to date. There has been one replacement and 50 more are planned. The Council adds:
“With regard to your query whether we anticipate being obliged to send uncommitted funds to central government , the Council reviews its position on a quarterly basis and has paid over £5.4m of receipts to central government in the same quarter as the monies were received and has subsequently paid over a further £15.7m where we have been unable to commit to the level of replacement housing due to the limitations on how the funding can be used.”
51 sales in 2012/13 – and a total of 263 sales to date. There have been 14 replacement properties and another nine have already been funded. The Council does not “anticipate” having to hand over money – so presumably they are on track to fund at least another 28 by April.
47 sales in 2012/13 – and a total of 396 sales to date. There are 428 “new build council owned properties” to be funded from RTB receipts already planned: “The planned new build programme assumes that we will not have to pay any capital receipts back to the government.” So presumably at least 47 will be funded by April.
12 sales in 2012/13 – and a total of 307 sales to date. There have been 87 replacements so far and a further 173 are planned at the moment. So even if nothing more is built or funded by April they have still easily beaten the replacement target several times over.
Kensington and Chelsea
Three sales in 2012/13 – and a total of 71. There have been six replacements so far and another 54 (at Grenfell Tower, Holmefield House, Silchester and Whistlers Walk) are planned before April. So another council easily exceeding the requirement.
Kingston upon Thames
11 sales in 2012/13 – and a total of 74 sales to date.. There have been 33 replacements so far. An unspecified number of further ones are planned – but already the Council has met it’s requirement for April three times over.
17 sales in 2012/13 – and a total of 281 sales to date. There have been 12 replacement properties so far as future plans are concerned:
“Lewisham Council is currently on course deliver a new build programme that will provide 500 new Council homes and support our housing association partners to deliver around 2,000 new homes by March 2018. Right to Buy receipts will be maximised to fund the development of properties within the Council’s programme as much as possible, within the restrictions placed on their use.
“All receipts retained up to the end of 2014/15 are committed to scheme and we are not currently forecasting to return any to the DCLG.”
59 sales in 2012/12 – and a total of 527 sales to date. There have already been 88 replacement homes with plans for a further unspecified number. Even if no more are delivered by April the council has easily met its requirement.
28 sales in 2012/13 – and a total of 159 sales to date, There have already been 24 replacement homes with a further 40 homes funded and plans for more. So the Council is on course to easily meet its requirement.
94 sales in 2012/13 – and a total of 740 sales to date. There have already been 44 replacement properties. A further 1,383 are planned by April 2018. Provided another 50 of more are funded by next April then the Council will be on track – they add that they “do not at present anticipate needing to return funds to central Government.”
Incidentally they add:
“In the 25 years following 2017/18 around 5,000 RTB sales are anticipated in the councils business plan. 9,500 replacement properties are planned.”
12 sales in 2012/13 – and a total of 422 sales to date. They sent me a report detailing 110 currently planned replacements including at least 40 by April.
33 sales in 2012/13 – and a total of 340 sales to date. They plan “48 properties with funds earmarked from RTB sales by March 2017 and is anticipating a minimum of another 70 by March 2018.” They add: “We do not yet know if we will need to return any funds.” It rather sounds as though they will.
55 sales in 2012/13 – and a total of 282 sales to date. There have already been 50 replacement homes. They add:
“The Council has robust plans in place for the expenditure of right to buy one for one replacement receipts within statutory time periods, and do not envisage having to send any unspent funding to central government.”
Plans for another 300 homes are already in place. So that sounds very likely that Wandsworth will hit its target for this year and subsequent years.
14 sales in 2012/13 – and a total of 141 to date. Already 45 replacement homes have been provided and so far there are plans for a further 138. Even if there are no more until after April already the Council has fufilled its requirement three times over.
So of the 20 councils above, 18 of them believe they will secure the one for one replacements required. Haringey Council says it won’t, Waltham Forest isn’t sure.
Of the 774 homes sold in 2012/13 there have already been 525 replacement homes built. From the replies detailed above there will be a minimum of another further 581 homes by April next year. That comes to 1,106.
Labour often talk about homes sold under the right to buy as being “lost”. The reasoning being that if a home is not owned by the state it ceases to exist. Of course it is still there. Often it is lived in by the same people – it’s just that instead if being council tenants they have the pride and independence of having become home owners.
Yet these figures indicate that even in terms of the stock of social housing the right to buy sales are increasing, rather than diminishing, the housing supply.
Sadiq Khan, the Labour candidate for Mayor of London is a vigorous opponent of the right to buy – but his basis for this is wrong. He says the policy reduces the availability of social housing but we can see now that it is increasing it. I don’t accuse him of dishonesty – it is complicated and he may well have got into a muddle. But surely he should acknowledge that most Labour councils are managing to make a success of the policy. If Newham, Hackney and Hounslow can do it then why not Ealing, Haringey and Waltham Forest?
If local councils have managed it why does Mr Khan feel that housing association will be any less effective at doing so as the right to buy policy is extended to their voters?