Recently, a report for the Local Government Association suggested that councils will fail to replace anything approaching the same number of replacement homes “lost” under right to buy. Councils are allowed to keep a third of the receipts, provided that they fund replacement homes (via the council or a housing association) within three years. Given that often councils own surplus land and that new housing can included “cross subsidy” with market housing being sold at a profit, it should not be an impossible challenge.
When I put in Freedom of Information requests three years ago, the general message from councils was that they would be meeting their targets, and so not have to return the money. In London, for instance, Haringey said it couldn’t manage it. However, other boroughs said they would exceed the target. For the cities outside London and for district councils, the responses was also generally positive.
Yet the LGA report is more downbeat. It claims that:
- Two thirds of councils will have no chance of replacing homes sold off under Right to Buy on a one-for-one basis in five years’ time unless a significant restructuring of the scheme takes place.
- Around 12,224 homes were sold under RTB last year. Faced with ongoing borrowing restrictions and based on the levels of sales remaining consistent, the analysis estimates that in 2023 councils would only be able to replace approximately 2,000 of these homes.
- Less than a third of councils would be able to sustain any kind of one-for-one replacement of homes sold under the scheme in five years’ time.
Suppose that is right. That would not mean that only 2,000 new homes would be built to replace the 12,000. The point that is that if councils can’t manage, then the Government does it for them. If they do not provide the additional properties, they must return the receipts with four per cent annual interest above the base rate to the Ministry of Housing, Communities and Local Government. This is allocated to Homes England (or the Greater London Authority in London) so the new homes can be delivered nationally.
But contrary to the LGA prediction for most councils, that is unlikely to prove necessary.
A spokesman for the MHCLG tells me:
“Since 2010, we have helped 90,730 households through Right to Buy and latest figures show councils have delivered 94 per cent of the replacements required to meet the one-for-one target.
“We’re ambitious to do much more which is why we’re already investing over £9 billion in affordable homes and enabling councils to borrow an extra £1 billion to build more social housing.
“We’ll also be consulting further to ensure we support local authorities so they can deliver more council homes.”
Dominic Rabb, the Housing Minister said in March:
“Nearly two million households have been helped to realise aspirations to own their homes through the Right to Buy since 1980. The Right to Buy gives more people the opportunity to own their home, improves social mobility and provides greater financial security. It brings the benefits of home ownership to those who would otherwise not have the opportunity.
“In 2012 the Right to Buy scheme was reinvigorated and the maximum discounts were increased to realistic levels. Of the 90,730 sales since April 2010, 83,272 were under the reinvigorated scheme demonstrating there is a continued substantial demand for the Right to Buy.
“Our record on the provision of affordable housing is a strong one with over 357,000 affordable homes delivered since 2010. This included 257,000 homes for rent. Whilst 69,000 local authority homes have been sold since 2010, there have been 127,000 new homes provided for social rent during the same period.”
Councils are complaining they can’t manage and need to keep a higher share of the proceeds. However, when it comes to the option of handing over all the proceeds, and letting Homes England get on with it, they suddenly decide that they can manage after all. Naturally, councils will always lobby for more money and more power. Yet the truth is they are doing rather better than they choose to admit.