Government sets out right to buy plans
The government has outlined the first details of how it will make the reintroduction of the right to buy work for councils and housing associations in its housing strategy.
Its keenly awaited document, published this morning, reveals that council tenants of at least five years will be offered discounts of up to half the value of their homes by lifting the caps ‘substantially’ to double the current discount available.
In September, at the Conservative Party conference Mr Cameron announced plans to start a ‘house-building revolution’ by bringing back the policy first introduced by Margaret Thatcher.
Under the plans, the government intends for 100,000 people to step up and buy their council homes – each of which will be replaced with a new ‘affordable’ rent property which will be let at up to 80 per cent of the market rent.
The government has pledged this will be a one for one replacement.
Councils have been waiting to find out whether or not they get to keep the sales receipts from right to buy sales. Under plans to reform the way council housing is financed authorities are to be given greater control of revenue from housing, but it was proposed that 75 per cent of right to buy receipts would go back to the Treasury.
However the government has now said it is ‘committed to letting councils keep the portion of the receipt needed to cover the housing debt associated with additional right to buy sales’.
It said this would ensure the sales do not have an impact on the viability of self-financing or the independence of social landlords.
The strategy document states that sales receipts will first be used to meet debt on additional properties sold, then ‘will meet Treasury and council forecast receipts’, and the remaining balance will be available for investment in replacement properties.
It adds that the receipt needed to fund the replacement property need ‘only be a fraction of the cost of a new home and the remainder can be found from other sources’.
‘Our initial modelling shows that the expected receipts will provide a sufficient contribution to the cost of replacement homes,’ it states.
A consultation document that will be published shortly will propose three models of replacing the homes sold through right to buy.
The first is through local delivery whereby councils retain the sales receipts and invest them locally – an option that is likely to win favour from authorities.
Secondly, there is a potential national delivery model which would allocate receipts through a national programme administered by the Homes and Communities Agency, except in London where it would be undertaken by the Mayor.
The third option is a hybrid of both whereby councils that are able to deliver one for one replacement and ‘secure good value for money’ through commissioning retain the receipts – and the rest surrender the receipts to the HCA.
For the preserved right to buy, the arrangements for housing associations will be ‘varied and depend on local agreements made with councils’.
It said that because housing associations are independent organisations it did not want to ‘mandate what housing associations do with any receipts they retain’.
Housing associations are expected to recycle receipts to support new build and other public benefits – however, where they are shared with councils the government expects associations to ‘work with them’ to develop replacement homes.
Right to buy discounts: what’s on offer
To qualify for the right to buy tenants must have been in the property five years, once eligible they will receive discounts worth:
- For houses - 35 per cent of value plus 1 per cent for each year of tenancy beyond the minimum, up to a maximum of 60 per cent
- For flats – 50 per cent of value plus 2 per cent for each year beyond the qualifying period up to a maximum of 70 per cent
The paper notes that most right to buy offers are currently capped, and states it will consult on how to raise these so the average discount for tenants ‘would be up to half of the value of their homes’.