Tenants are eager to take advantage of the revamped right to buy, but problems for councils remain
A few more hurdles
After weeks of damaging headlines and, at the time of writing, a likely drubbing in many of the local elections taking place yesterday, a light may be emerging at the end of the tunnel for the Conservative Party. Our report this week shows that right to buy applications have surged in the month since the discount was increased to £75,000 and suggests that the government might well realise its target of 100,000 purchases.
There are, however, a number of issues that councils will now have to resolve. Chief among these is how to ensure they deliver on the pledge from housing minister Grant Shapps that receipts from each home sold will be used to build a replacement to be let at sub-market - although not necessarily social - rent.
As we reported last week, councils have been engaged in negotiations with officials from the Communities and Local Government department over precisely how this will work. There are sticking points - whether or not arm’s-length management organisations can build the homes; the length of time councils have before they are penalised for not using the receipts - but these seem set to be ironed out.
The government has also made an important concession, which will see councils retain all right to buy receipts above the level of sales anticipated by the Treasury prior to the introduction of the revamped programme.
While undoubtedly helpful, this latter point has still left many councils - especially those for which the amounts remaining after the sale discount has been applied will be small - unsure as to whether they can afford to build replacement homes. After all, no matter how high the receipt, this can only be used to fund 30 per cent of the cost of building a replacement property. Councils have to fund the remainder themselves. This has resulted in many dragging their heels over agreeing to the CLG proposals on the use of receipts by the end of June deadline.
While understandable, the government will be determined to ensure its ‘one-for-one’ - not ‘like-for-like’ - replacement pledge is delivered. If this means pooling receipts and building wherever it can through the Homes and Communities Agency, then it will. Surely better for councils to ensure some re-provision in their area of the right homes rather than leave it to chance?