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Piloting the Right to Buy extension
With the Right to Buy extension pilot due to land this summer, Nathaniel Barker unpicks two sticking points. Picture by Getty
It’s been a long time coming.
More than three years on from when the Conservative election manifesto recommended the extension of Right to Buy discounts to housing association tenants, the policy will finally be piloted at scale this summer.
From August, tenants of housing association homes across the Midlands will be able to purchase their properties at a discount.
It follows on from a smaller pilot involving just five landlords, which was previously run in 2016 – though this new trial will be a different beast altogether.
All housing associations with more than 1,000 homes in the Midlands – both east and west – are expected to take part, and smaller organisations can still sign up if they wish.
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According to government guidance on the new pilot issued last month, a full list of participants “will be published in due course” via the National Housing Federation (NHF) or Ministry of Housing, Communities and Local Government (MHCLG) website. Boards are currently deliberating on whether to join, but Inside Housing understands that no landlords with more than 1,000 homes are expected to opt out.
Funded through £200m from the Treasury, the new large-scale pilot will also throw two crucial and as-yet-untested concepts into the mix: portability of discounts and one-for-one replacement.
These look set to be the most administratively complex elements of the pilot.
Portability means that tenants are able to use their Right to Buy discount to purchase a different housing association home to the one they currently live in, including properties owned by other organisations, if theirs is exempt.
"It is housing association boards that will ultimately decide whether or not individual homes are sold."
Many are likely to be. For instance, units delivered through Section 106 arrangements will often be required to remain affordable in perpetuity, while rural homes and specialist supported housing are also likely to be exempt. In the smaller pilot, 32% of homes were omitted. Scaled up across an entire region, this will be tens of thousands of homes.
It is housing association boards that will ultimately decide whether or not individual homes are sold.
Associations will therefore be expected to publish their own ‘local policy’ for exemptions and discount porting.
It’s easy to see how this might lead to difficulties; some housing associations will inevitably want tighter rules than others around which properties can be sold off – and indeed, who can move into their stock.
These issues are likely to be particularly acute in rural areas, where rural exception sites are often the only land available for development. Associations are able to build in these places because they can convince planners the homes will provide affordable housing for local people forever. Portability, which could see people from other areas moving in to purchase one of these homes, therefore poses a problem.
That was certainly the view taken by Warwickshire Rural Housing Association. With a stock of around 550 homes, it was not expected to join the pilot – but was keen to take part to help test some of the concerns rural housing associations have been voicing about the Right to Buy extension in practice.
“The rural associations across the country have got a big issue about portability and therefore, although there was this threshold, we sought legal opinion because we felt there would be a benefit for rural associations to be involved,” says Derrick Dyas, chair of Warwickshire Rural Housing Association.
“But when we were informed that by joining we would have to accept that all of our units could be thrown into the mix, we decided against it. That would be sending the wrong message to the rural communities that we work with. We guarantee when we work with parish councils that we will build the homes for local people in perpetuity only and that they would never be sold to people without a connection to the area.”
The association had intended to keep a “watching brief” over a special rural offshoot to the main pilot, which 10,000-home Connexus had offered to run. However, the MHCLG turned this proposal of a special pilot down, telling Inside Housing it “did not meet the criteria for us to proceed with it”.
However, other attempts to gear up for portability appear to have been more positive. Matrix Housing Partnership is made up of Accord Group, Rooftop Housing Group, Trent & Dove Housing, Trident Social Investment Group and Watmos Community Homes, and is collaborating to form a common policy for how portability will work in the pilot.
Boris Worrall, chief executive of Rooftop and chair of the West Midlands regional committee at the NHF, explains: “The concept of portability is inherently complicated, so a number of us are actively exploring the development of a common framework for that. Potentially others could join that, too. The more that we can agree upfront how to manage it, the better.”
Collaboration of this kind will surely be essential.
The Right to Buy extension: a timeline
David Cameron announced a policy of extending the Right to Buy to housing association tenants on the campaign trail in 2015
April 2015
The Conservatives announce an extension of the Right to Buy to housing association tenants as the flagship policy of their election manifesto launch. To criticism from housing figures, the party says the extension will be funded through the mass sale of high-value council homes, and later wins a surprise majority at the election.
September 2015
Amid reports that the government is planning to nationalise and sell off the housing association sector, associations are asked to vote on a deal developed by the National Housing Federation to adopt the Right to Buy extension policy voluntarily.
October 2015
The sector votes in favour of the deal. Soon after, housing association debt is added to the national accounts by the Office for National Statistics, and the government promises to deregulate to reverse this position rather than the feared nationalisation.
November 2015
A pilot of the policy with five associations is announced in the Autumn Statement, to get under way in April.
June 2016
The EU referendum results in a vote for Brexit, leading to David Cameron’s resignation and the appointment of Theresa May as prime minister. Ms May’s government institutes a less homeownership-focused housing policy.
November 2016
A large-scale Right to Buy pilot is announced. The Midlands later emerges as the location.
August 2018
Large-scale regional pilot due to begin.
The second major test point will be whether the homes sold can be replaced on a one-for-one basis. This is another of the four key principles agreed with the government.
For the policy to be a success it is vital that the replacement element works; the loss of social housing associated with the traditional version for council tenants is the major reason the Right to Buy has become so controversial. Here the mechanism for funding replacements will be quite different, with associations given full compensation for the discounts offered, paid for by the Treasury.
And it’s important to pay attention to the specific terms of the deal for associations: the replacements are to be delivered “nationally”.
“That acknowledges some of the challenges of replacing homes that have been sold on a like-for-like basis in a real-world setting,” says James Prestwich, head of policy at the NHF.
When Mr Prestwich insists that the Right to Buy extension “must absolutely not come at the cost of social and affordable housing”, he likely speaks for many.
But preventing the loss of social housing at a local level may be difficult – particularly if the policy proves especially popular in certain areas. And under the guidance, the “type, tenure and location of replacements are a matter for the housing association as long as the property can be deemed to be affordable”.
"Mr Prestwich emphasises that co-operative working between housing associations will be key"
In theory then, a home let at social rent in a Shropshire village could be ‘replaced’ with a shared ownership unit in central Birmingham and still comply. This would doubtless lead to friction with the local authority concerned.
Mr Prestwich emphasises that here again, co-operative working between housing associations will be key – indeed, he suggests that is a major opportunity presented by the Right to Buy extension.
Preparations over the next few months will focus on developing complementary plans for the replacement policies themselves, as well as strategies to communicate these with tenants.
Some time after the pilot finishes in 2020, once long enough has passed for the replacements to be completed, an evaluation report will be published. This document will provide figures for how portability and the one-for-one rule work in practice.
Perhaps this is the biggest signal of the future of a policy which remains a hangover from a previous era of Conservative government and for which there is no longer a clear funding mechanism for national roll-out.
It is possible this latest stage in the saga represents an opportunity to boot the full extension another three years down the line.
So while the pilot will land in the Midlands this summer, don’t expect the scheme to be taking off nationally any time soon.
