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Leasehold abuse rules exempt houses from Right to Buy pilot
Rules to stop developers charging extortionate ground rents mean tenants living in leasehold housing association properties will not be able to purchase their homes in the Voluntary Right to Buy pilot, it has emerged.
In July, communities secretary James Brokenshire announced that new government funding schemes would no longer be able to use public money for the sale of leasehold houses.
The move came in response to a scandal over unfair practices in the leasehold sector, which involved builders selling new houses as leaseholds and forcing owners to pay huge sums in ground rents.
It meant developers would no longer be able to use Help to Buy money to build leasehold houses.
But the government has confirmed to Inside Housing that the rules also mean housing association tenants in the Midlands who entered the ballot for the long-anticipated Voluntary Right to Buy pilot will not be able to buy their home if it is leasehold.
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Instead, they will need to “port” their Right to Buy discount to apply to buy another property.
Leaseholds usually only apply to flats, but housing associations may own houses on a leasehold basis, with local authorities owning the freehold.
A spokesperson for the Ministry of Housing, Communities and Local Government (MHCLG) said: “All leasehold houses will be exempt from sale through the Voluntary Right to Buy pilot, but tenants living in leasehold houses will be deemed eligible for a discount on another property owned by them or another housing association in their area.
“This position was made clear to tenants at the point of registration on the Right to Buy website.”
Guidance on the pilot published by MHCLG and the National Housing Federation makes no mention of restrictions on leasehold houses.
The July announcement came just six weeks before the Right to Buy ballot was opened.
A tenant of a major Midlands housing association told Inside Housing that he successfully entered the ballot, only to be told that he would have to move his family out of the home they have lived in for 18 years in order to buy as the freehold is owned by Birmingham City Council.
He said: “I want to voice my concerns and disappointment as loud as possible and make whoever is responsible for these restrictions understand the huge negative impact it has on hard-working families who have been patiently waiting and promised to get a helping hand to own their house and call it a home.”
A spokesperson for the association – which the tenant requested be kept anonymous – said: “We understand the frustration felt by this customer. However [the association] and all other participating pilot organisations are required to follow government guidance received in July stating that all leasehold houses will be exempt from sale through the Voluntary Right to Buy pilot, and which has subsequently been reflected in the exclusions policy on our website.”
It is not known how many tenants hoping to exercise their Right to Buy will be affected.
The ballot for the Midlands pilot ran for one month between August and September. Unique reference numbers for successful applicants are currently being allocated.
