Government offers councils six-month Right to Buy receipts repayment extension

“By rolling up the next two deadlines to the end of the calendar year, the department’s objective is that more will be spent on replacement social housing,” said the MHCLG letter, dated 12 June and signed by Jenny Preece, deputy director of social housing.

Councils are allowed to hold on to Right to Buy receipts to spend on replacement homes for three years, otherwise they must pay it back to the Treasury.

The Local Government Association (LGA) called for the deadline to be extended to at least five years amid concerns that councils will not have time to spend the cash, with housebuilding delayed by the COVID-19 pandemic.

David Renard, housing spokesperson for the LGA and leader of Swindon Council, said: “We are pleased government has listened to our call for councils to be given an extension to the time they are allowed to spend money from Right to Buy sales.

“With the building of new homes delayed or stopped altogether by the coronavirus crisis, many councils have been concerned that they will not have the opportunity to spend Right to Buy money on replacing much-needed homes sold under the scheme.

“While we continue to push for a longer extension, this is a step in the right direction and will go some way to allowing councils more time to replace these homes, and make sure we can provide desperately needed social homes to those who need them.”

MHCLG told councils to respond to its offer by 3 July and “keep the department informed if it becomes clear over coming months that they are likely to face challenges meeting the 31 December deadline”.

Under the Right to Buy, council tenants can purchase their homes at discounts of up to £112,300.

For 85,645 homes sold through the policy since discounts were hiked in 2012/13, only 28,090 replacements have been started or acquired despite councils being expected to replace homes sold off on a one-for-one basis.

The LGA blames the lack of replacements on the fact that councils are only allowed to use a third of each receipt to spend on building new homes.

A spokesperson for MHCLG said: “We have listened to councils’ concern that that the coronavirus pandemic may affect their housebuilding programmes and in turn their ability to spend their Right to Buy receipts within the permitted three years.

“That is why we have extended the deadline, giving local authorities an additional six months in which to spend the Right to Buy receipts. We will continue to liaise with councils over the coming months.”