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National VRTB roll-out would cost £14.6bn in first decade

Giving housing association tenants the Right to Buy would cost the public purse around £14.6bn in the first decade, Inside Housing analysis has found.

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Analysis by @Insidehousing has found that a national roll-out of Voluntary Right to Buy for housing associations could cost the taxpayer more than £14bn #UKhousing

According to calculations drawn from numbers included in a government-commissioned report looking into the Midlands Voluntary Right to Buy (VRTB) pilot, it is estimated that in the first year alone, the bill for the taxpayer would come close to £2.1bn.

Last year, a large-scale pilot of the Voluntary Right to Buy – a version of the policy agreed between the housing association sector and government in 2015 – came to an end in the Midlands after nearly two years of testing.

A consultancy’s evaluation report on the pilot, published last month by the Ministry of Housing, Communities and Local Government (MHCLG), estimated that were the policy rolled out across England, 32,000 housing association homes would be sold off in the first year. After 10 years, the report said, 223,843 sales would take place.

The review also revealed that the 1,892 sales through the Midlands pilot cost the government £65,390 each on average, mostly through reimbursing providers for the sizeable discounts on offer.

At that price, Inside Housing has calculated that 223,843 sales would cost the Treasury £14.6bn, while the 32,000 anticipated in the first year of a national roll-out would cost £2.1bn.

For context, the government’s entire affordable housing grant budget for 2021/26 is £11.5bn, with that money expected to deliver 180,000 new homes.

MHCLG branded the figures “speculative” and claimed the evaluation report showed that the VRTB “is good value for money”.


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Boris Johnson’s government has indicated its commitment to the VRTB, describing the Midlands pilot as “successful” and pledging to “evaluate new pilot areas” in its 2019 election manifesto.

But there is currently no agreed funding mechanism in place for the policy.

Initially, former prime minster David Cameron had proposed paying for the discounts through the forced sell-off of higher-value council homes when first announcing plans to extend the Right to Buy to housing associations in 2015.

The Higher-Value Asset Levy, as this latter policy was called, was later scrapped in 2018 while Theresa May was in Downing Street.

Housing associations’ ability to meet the government’s commitment to replacing homes sold through the VRTB on a one-for-one basis was called into question by the evaluation report.

And researchers warned that “the replacement homes will be on average smaller, at higher rents and include more homes for shared ownership and fewer for rent”.

Boris Worrall, chief executive of Rooftop Housing Group, which was involved in the Midlands VRTB pilot, said: “I think if you look at the overall cost of executing each sale, it’s about £65,000.

“I would argue that from a value-for-money point of view that is at the higher end of the capital grant needed to deliver a new shared ownership home and I would argue that’s a better value for money way to support affordable homeownership.”

A spokesperson for MHCLG said: “These figures are speculative – the independent evaluation of the Midlands Voluntary Right to Buy pilot has shown that the scheme is good value for money.

“Right to Buy has helped nearly two million council tenants realise their dream of homeownership, and the Midlands pilot has seen over 1,800 housing association tenants become homeowners.

“We’re considering further findings from the report and how they can help inform future policy – we will also evaluate new pilot areas and announce more details on that in due course.”

A source added that the government “will continue to work closely with the housing association sector on the next steps on VRTB”.

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