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Councils using new borrowing powers to buy back ex-Right to Buy homes
Two local authorities are taking advantage of the recent scrapping of the borrowing cap to buy up former Right to Buy properties and rent them out as social housing.
Nottingham City Council has announced a £5m scheme to buy former council houses that were sold to tenants under the Right to Buy scheme. It will fund 70% of the spending through Housing Revenue Account borrowing, with the remaining 30% being met through Right to Buy receipts.
Meanwhile, Leicester City Council this week also approved a similar project that will see £8m spent on buying up a mix of former council homes and privately owned properties. Approximately 50 homes will be purchased using a combination of borrowing and money made through the selling of Right to Buy homes.
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This is part of a larger trend of councils using the money they raise through Right to Buy sales to buy back the houses they were forced to sell at a discounted price.
Already in the second stage of their acquisition project, Nottingham City Council have spent £2.85m buying over 30 properties since March 2017, it is has not put a figure on the number of homes it plans to buy with the additional £5m.
While the council agreed this scheme is a cost and time efficient way to replenish their housing stock, it was acknowledged that more needed to be done to counter the growing demand for housing and the rise of homelessness in Nottingham.
Jon Collins, leader of Nottingham City Council, said: “With an ever-growing waiting list and the increasing problem of homelessness, we’re looking at every way possible to increase the number of affordable homes in the city.
“Buying houses in this way allows us to provide better accommodation much more quickly and cost effectively than building from scratch but having said that, we have completed 500 new homes in the past five years in partnership with Nottingham City Homes.”
The government scrapped a long-standing limit on council’s borrowing powers in October, hoping to spark a "new generation" of council housebuilding.
Click here to read our December 2017 investigation into Right to Buy re-lets
These plans mark some of the first publicly announced strategies based on the new funding freedoms.
The Right to Buy sees councils required to sell homes to tenants at a discount, with close to 20,000 sold in the past financial year and almost two million since the scheme was launched in the 1980s.
Inside Housing revealed in May that councils have spent £50m of funds raised through Right to Buy sales since 2012 buying back homes sold under the scheme.
May's Conservative Party conference speech: the housing bits in full
Below is the text of the housing section of Theresa May's party conference speech:
"Last year I made it my personal mission to fix another broken market: housing.
We cannot make the case for capitalism if ordinary working people have no chance of owning capital.
To put the dream of home ownership back within their reach, we scrapped stamp duty for most first-time buyers – and over 120,000 households have already benefited.
We’ve helped half a million people onto the housing ladder through other schemes like Help to Buy.
And this week we have announced that we will charge a higher rate of stamp duty on those buying homes who do not live and pay taxes in the UK, to help level the playing field for British buyers.
The money raised will go towards tackling the scourge of rough sleeping.
But the truth is that while these measures will help in the short term, we will only fix this broken market by building more homes.
And that is what we are doing.
More new homes were added to our stock last year than in all but one of the last 30 years.
But we need to do better still.
The last time Britain was building enough homes – half a century ago – local councils made a big contribution.
We’ve opened-up the £9 billion Affordable Housing Programme to councils, to get them building again.
And at last year’s conference I announced an additional £2 billion for affordable housing.
But something is still holding many of them back.
There is a government cap on how much they can borrow against their Housing Revenue Account assets to fund new developments.
Solving the housing crisis is the biggest domestic policy challenge of our generation.
It doesn’t make sense to stop councils from playing their part in solving it.
So today I can announce that we are scrapping that cap.
We will help you get on the housing ladder.
And we will build the homes this country needs."
Speech given to the Conservative Party conference on 3 October, 2018.
