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Time to remove all restrictions over the use of Right to Buy receipts

Councils should not only be able to use receipts for shared ownership housing, they should have complete freedom over the money raised, argues John Bibby

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Time to remove all restrictions over the use of Right to Buy receipts

The discounts on offer to those fortunate council tenants who can afford to buy their home under the government’s ‘reinvigorated’ Right to Buy have resulted in a significant increase in the sales of council housing since 2012.

The government promised that additional homes sold under the new Right to Buy policy would be replaced on a one-for-one basis but the fact remains that this promise is simply not being delivered.

Given the huge discounts on the market value of homes sold under the Right to Buy and the restrictions placed on councils in being able to use no more than 30% of the net capital receipts from the sale of such homes to fund the cost of providing replacement social housing, it comes as no surprise that social rented homes are currently being sold off at a rate almost three times faster than councils can replace them.


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These limitations placed on councils, coupled with the cap on borrowing in the Housing Revenue Account and the four-year mandatory rent reduction imposed by the government mean that, for many councils, converting the net capital receipts received into new social rented housing simply does not stack up.

The lack of information about future social rent policy and the planned introduction by government of a high-value asset levy on councils simply adds further uncertainty.

Through treasury advisors Arlingclose, some 50 councils have come together to make a request to ministers to be able to use Right to Buy receipts to fund open market shared ownership housing to replace the social rented homes sold under the Right to Buy.

“For many councils, converting the net capital receipts received into new social rented housing simply does not stack-up.”

Right to Buy receipts derive from the sale of social rented housing and many would argue that the receipts should stay in the social housing sector and be used to fund the promised one-for-one replacement of social rented housing sold under the Right to Buy and help halt the further depletion of the stock of social rented housing.

However the simple fact remains that the restrictions placed on councils by central government, coupled with the rising cost of land and construction, mean that in many instances it is impossible to fund the building of new social rented homes to replace those sold.

These restrictions can sometimes mean that the capital receipts from Right to Buy sales can often be left unspent and/or be reclaimed by central government.

What is required is a complete root and branch review of the use of Right to Buy capital receipts and the removal of all restrictions giving local councils the freedom to decide how best to use such Right to Buy receipts at a local level to meet local housing needs.

Given complete freedom and the lifting of restrictions on the proportion of any capital receipts that can be used to fund new homes, many councils will no doubt decide to commit such resources to building replacement social rented housing, others might choose to invest all or part of the capital receipts into affordable rented housing, shared ownership or other forms of affordable housing.

The key is that this will be a local decision made at a local level to meet local needs.

“The dead hand of the Treasury must be lifted.”

The Housing White Paper published way back in February recognised that the housing market in this country is broken and the government promised to fix it, but we have seen very little by way of action from government in the months since then.

If we are to build the hundreds of thousands of new homes, of all tenures, that this country needs, on the assumption that this government remains committed to the Right to Buy, then the dead hand of the treasury must be lifted.

Ministers must remove all restrictions on the use of Right to Buy receipts and give local councils the freedom to decide how best to use those receipts to build new homes to meet the specific local housing needs in their areas.

John Bibby, chief executive, Association of Retained Council Housing

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