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A Voluntary Right to Buy for Housing Association Tenants in England

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A Voluntary Right to Buy for Housing Association Tenants in England BRIEFING PAPER Number 07224, 1 March 2021 A voluntary Right to Buy for By Wendy Wilson housing association tenants Cassie Barton in England Inside: 1. Right to Buy: background 2. RTB and housing associations 3. Findings from the 2017 pilot VRTB schemes www.parliament.uk/commons-library | intranet.parliament.uk/commons-library | [email protected] | @commonslibrary Number 07224, 1 March 2021 2 Contents Summary 3 1. Right to Buy: background 6 1.1 RTB timeline 6 1.2 Data on RTB sales 8 1.3 Replacing the sold stock 10 One-for-one replacement mechanism: the ‘invigorated’ RTB from 2012/13 12 How does the Government measure progress? 13 Replacements are failing to keep track 14 Commentary on the RTB replacement policy 15 The Government response to missing the one-for-one replacement target 19 2. RTB and housing associations 23 2.1 Current position 23 2.2 A voluntary Right to Buy (VRTB) 23 The NHF offer to Government 24 The Housing and Planning Act 2016 26 When will the VRTB be introduced? 27 Findings from the 2018 pilot 27 2.3 Comment on the VRTB (including the Midlands pilot) 29 Number of eligible tenants 30 Exemptions from the voluntary RTB 31 Portable discounts 33 Non-compliant associations 34 A requirement to replace the sold properties 35 Paying for VRTB discounts 37 Losing social rented homes to the private rented sector 38 Fraud 38 The status of housing associations as private bodies 39 3. Findings from the 2017 pilot VRTB schemes 41 Contributing authors Cassie Barton, statistics Richard Cracknell, statistics Cover page image copyright: Wendy Wilson 3 A voluntary Right to Buy for housing association tenants in England Summary The statutory Right to Buy (RTB) and housing association tenants The statutory Right to Buy (RTB) was introduced in October 1980. To date, around 2 million council properties in England have been sold. As a rule, assured tenants of housing associations (aside from those who were previously secure council tenants with a “preserved” RTB) do not have the RTB on the same terms as council tenants. A commitment to extend the RTB to assured tenants in England The Conservative Party’s 2015 Manifesto included a commitment to “extend the Right to Buy to tenants in Housing Associations to enable more people to buy a home of their own.” Subsequently, the 2015 Queen’s Speech announced that a Housing Bill would be introduced to “dramatically extend the Right to Buy to the tenants of Housing Associations – putting home ownership within the reach of 1.3 million more families.” While welcomed by housing association tenants who have long sought the RTB, the measure is controversial and generated strong reactions from social landlords. Local authorities were concerned that, as originally envisaged, the measure would be partly paid for by the sale of their most valuable (vacant) stock. Commentators questioned whether sales of vacant council stock would generate sufficient funding to pay for an extended RTB. Housing associations questioned the legitimacy of legislating to force the sale of assets owned by charities/not-for-profit companies. Agreement to extend the RTB on a voluntary basis The National Housing Federation (NHF), the representative body of housing associations, put an offer to Government in September 2015 in which it proposed the implementation of an extended RTB on a voluntary basis. The offer was described as a compromise with a view to securing the independence of housing associations and the best deal on compensation (for discounts) and flexibilities (the ability to refuse the RTB in relation to certain properties). During his speech to the Conservative Party Conference on 7 October 2015, then-Prime Minister, David Cameron, announced that agreement had been reached on the NHF’s offer, and that the first housing association tenants would be able to buy their homes in 2016. During the Autumn Statement and Comprehensive Spending Review 2015, the Chancellor announced that the extended RTB would be piloted by five housing associations. The pilots completed their work and a report on findings was published in January 2017. The NHF took part in detailed negotiations over the implementation of the voluntary RTB. An Implementation Advisory Board was established to make recommendations. On 5 April 2016 the NHF published two briefing papers: one setting out the key principles of the agreement to implement the voluntary RTB scheme and another on the policy development process. This document clarified that decisions over which properties may be exempt from the voluntary RTB would be left up to each housing association’s board. August 2016 saw the publication of Voluntary Right to Buy: Scheme Design. The Housing and Planning Act 2016 Paying for the discounts Given the agreement to proceed on a voluntary basis, the Housing and Planning Act 2016 does not contain measures to implement a statutory RTB for housing association tenants. The Act does, however, contain measures that would have required English local Number 07224, 1 March 2021 4 authorities to make an annual payment to Government in respect of expected sales of “higher value” vacant stock over the year. The intention was to use these payments to compensate housing associations for selling housing assets at a discount to tenants. The social housing Green Paper, A new deal for social housing (August 2018), announced that the Government would not “bring the Higher Value Assets provisions of the Housing and Planning Act 2016 into effect”. This left unanswered the question of how discounts on sales of housing association properties under an extended RTB scheme would be funded. The discounts offered under the Midlands pilot scheme (see below) were reimbursed by the Ministry of Housing, Communities and Local Government (MHCLG). The Midlands pilot scheme The Autumn Statement 2016 announced Government funding for “a large-scale regional pilot of the Right to Buy for housing association tenants.” After some delay, Autumn Budget 2017 confirmed that a regional pilot would go ahead in the Midlands in 2018. The pilot was launched on 16 August 2018 – those interested had to register online before midnight on 16 September 2018. Applicants who were successful in the ballot had to apply direct to their landlord to continue the process. Landlords carried out additional eligibility checks. Guidance for associations taking part in the Midlands pilot scheme was published in May 2018. The pilot was particularly focused on two aspects of the voluntary agreement that the original pilots did not cover, namely: • one-for-one replacement; and • portable discounts. The Conservative Party’s 2019 Manifesto said: We will also maintain the voluntary Right to Buy scheme agreed with housing associations. Following the successful voluntary pilot scheme in the Midlands, we will evaluate new pilot areas in order to spread the dream of home ownership to even more people. An evaluation of the midlands pilot scheme was published on 8 February 2021. At 30 April 2020 there had been 1,892 sales. Findings from the pilot scheme are included in section 2.3 of this paper. The Government said that the impact of the pilot would be assessed before deciding on the next steps for the voluntary RTB. Replacing the sold properties The 2015 Government said that properties sold under the voluntary scheme would be replaced on a one-for-one basis. This raised questions around how replacements would be financed; the timing of replacement (there will always be a time-lag); and where the replacements would be built. In London, in certain circumstances, there is a requirement to secure the development of two affordable homes for each dwelling sold. Comparisons have been drawn with the existing commitment to replace properties sold since RTB discount levels were increased on 1 April 2012. RTB sales increased from around 3,700 in 2011/12 to around 18,100 in 2016/17. There were around 15,300 Right to Buy sales in 2019/20. The Right to Buy one-for-one additions policy allows for replacement of the homes sold within three years of the date of sale. The replacement properties are not like-for-like and there is no requirement for the properties to be built in the same area. 5 A voluntary Right to Buy for housing association tenants in England The Government’s March 2018 statistical release noted for the first time that housing starts were “falling short” of the commitment to replace additional RTB sales within three years. The latest statistical release, published in January 2021, confirms that RTB replacements continue not to keep up with sales. The previous Housing Minister, Dominic Raab, responded to the March 2018 release saying: “we believe there is a case for greater flexibility on the use of receipts from Right to Buy sales.” August 2018 saw the launch of a consultation exercise on Use of receipts from Right to Buy sales with submissions accepted up to 9 October 2018. The outcome of the consultation exercise is outstanding. The Government’s response (October 2020) to one of the recommendations in the Housing, Communities and Local Government (HCLG) Select Committee’s report, Building more social housing (July 2020) noted “The Government is considering its response to the receipts consultation which will be published in due course”. The Midlands VRTB pilot scheme identified the key barriers to replacing the homes sold as land availability and insufficient funding raised from sales. Select Committee inquiry 2015-16 The extension of the RTB to housing association tenants was the subject of an inquiry by the Communities and Local Government Select Committee over 2015-16. The Committee expressed support for the Government’s aspiration to extend home ownership and increase housing supply, but concluded that there were “unresolved issues” and that the Committee “remain concerned that the Government’s policies could have a detrimental effect on the provision of accessible and affordable housing across all tenures.” No roll-out date announced No implementation date for the extended RTB has been announced.
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