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RTB replacements ‘all but eliminated’ in five years, says LGA
Homes built to replace those sold through the Right to Buy could be “almost eliminated” in five years time unless the policy is reformed, according to the Local Government Association (LGA).
New analysis carried out by Savills on behalf of the council trade body found only around 2,000 Right to Buy replacements will be built by 2023.
More than 12,000 local authority homes were sold through the policy last year.
Councils are supposed to replace stock lost through the Right to Buy on a one-for-one basis, but are only allowed to keep around a third of receipts from homes sold to put towards replacements.
The LGA said these strict rules mean two-thirds of councils have “no chance” of replacing every home sold in the next five years without further flexibility.
It called on ministers to introduce a “comprehensive package of reform” to Right to Buy allowing councils to keep 100% of receipts and set the discounts locally, as well as greater ability to borrow for housebuilding.
Inside Housing revealed last month that less than half of the £4.8bn raised through Right to Buy sales was spent on replacements, with the Treasury taking £920m.
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Martin Tett, housing spokesperson for the LGA and leader of Buckinghamshire County Council, said: “We know that the Right to Buy changes lives – it helps people who otherwise wouldn’t be able to get on the ladder experience the security and independence of homeownership. It is essential that it continues to do so.
“However, we are now in a situation where without fundamental reform of the way the scheme is funded, this vital stepping stone into homeownership is under threat.
“Councils urgently need funding to support the replacement of homes sold off under the scheme, or there’s a real chance they could be all but eliminated.
“Without a pipeline of new homes, future generations cannot benefit from the scheme.”
The LGA said more than 60,000 council homes have been sold off in the past six years at around half market value, with only 14,000 replaced.
The analysis also found that with extra borrowing flexibility and Right to Buy reform, councils could build around 16,000 homes a year – compared with the 3,363 delivered in 2016/17.
Steve Partridge, a director at Savills Housing Consultancy and author of the report, said: “It is clear that with flexible support local authorities can more than replace those homes sold under the Right to Buy. The lifting of debt caps would need to form an essential part of this support.
“The government programme for lifting borrowing headroom announced in the budget and shortly to be consulted on is a very useful first step and will be seen as a welcome opportunity for many authorities to achieve a bigger replacement programme.”
In March, the government announced it would consult on giving councils “greater flexibility” over the use of Right to Buy receipts after falling behind its pledge to replace additional homes sold under the Right to Buy on a one-for-one basis.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “This government remains committed to helping people get a foot on the housing ladder through the Right to Buy scheme.
“We will be consulting local authorities in the coming months on ways to increase their flexibility to replace homes sold, and will announce further details in due course.”
Update: at 9.26am, 11/06/18 A comment from MHCLG was added to the story.
