Cllr John Moss is a councillor in Waltham Forest
Scotland and Wales have both removed the Right to Buy from council tenants. In England, councils sat on cash from Right to Buy sales before the 2015 election for political reasons, hoping for a Labour Government and to create the impression that the policy was a failure. Now, the extension of Right to Buy to Housing Association tenants is a massive mess, with councils being robbed to pay unnecessary compensation to Housing Associations.
Swift action is needed to save this transformative policy.
With both Right to Buy for council homes and its extension to Housing Associations, Conservatives have used the wrong arguments to sell Right to Buy. The Left, as usual, are well organised and they have pushed several anti-arguments to try to discredit the idea. However, it remains something which is very popular with the public, especially council and Housing Association tenants. If we don’t want it to go the same way in England as it has in Scotland and Wales we must change some of the rules and we must focus on how it provides new homes which are available for people on waiting lists or in temporary accommodation, not on replacing the homes sold.
First, we must re-state the arguments. Right to Buy gives somebody the chance to buy the home they live in. If they didn’t buy it, nothing would change. If they couldn’t afford to move out, they would still be council or Housing Association tenants, occupying that home and paying a below-market rent which in many cases doesn’t even cover the cost of management, maintenance, repairs and renewals. If they could afford to move out, they would need a home elsewhere, so you gain nothing in terms of housing stock. By selling to them at a discount, you extract cash from people who no longer need the support of a below-market rent, cash which can be used to build a new home, available for somebody who does.
Second, the discounts are not massive. In fact, in the most expensive parts of England, Right to Buy sales are very low. This is because it doesn’t matter if you get £104,000 off the price of a £2 million flat in the City of London or a £3 million Georgian terraced house in Islington, (and it’s capped at £77,900 outside London). Hardly any council tenants can afford that. Where discounts make a real difference is to families in three-bed semis in city suburbs who want to secure their family’s future.
Third, one-for-one replacement doesn’t matter. The home sold is occupied. Nobody else can live in it. What matters is using the cash released to build new homes which are available for people on waiting lists and in temporary accommodation.
Finally, Housing Association tenants should get the Right to Buy where the home was built with Government Grants and Housing Association should recognise that not only do they get cash from the sale, but they lose the responsibility of paying for management, maintenance, repairs and renewals. So overall, they’re getting a pretty good deal from an asset which, as a property let at a below-market rent, was probably worth a lot less than they’re getting for it. They too should stop obsessing about one-for-one replacement and recognise that they are getting cash to build new homes.
We also need to change the rules about how councils use the cash. My work last year showed that councils in London are sitting on a lot of cash which they haven’t used to build new homes. Some have, but many have resorted to giving grants to Housing Associations and charitable housing providers to secure nomination rights, or have simply given the cash back. If they have given it back that’s a massive waste because it has sat there for three years doing nothing.
So Gavin Barwell, the new Housing Minister, should announce three things as soon as possible.
- An end to the Voluntary Agreement with Housing Associations and a White Paper on new legislation to extend Right to Buy to Housing Association tenants by legislation.
- A relaxation of the rules which apply to councils as to how they use Right to Buy receipts. They should be allowed to fund up to 50 per cent of the cost of new homes they build, not 30 per cent as now, and they should be allowed to set rents at up to 90 per cent of the Local Housing Allowance rent for that property. Also, Treasury should no longer clawback parts of the receipt. If this was done this year, many councils whose build projects were put on hold because of George Osborne’s ill-advised rent cut might get back on track and we might see more building next year.
- He should renounce the idea that properties sold under Right to Buy need to be replaced one-for-one and confirm that he won’t be using the powers granted to the Communities and Local Government Secretary to take cash from councils to compensate Housing Associations. He should continue to require councils to sell high-value homes when they become vacant, but that cash should be left with councils to build new homes, with the same rules applying as for Right to Buy receipts.
Nothing else will accelerate home-building in the public sector as quickly.