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Right to buy for housing association tenants: short-term political gain, long-term public pain
Close to 2m council tenants have purchased their homes under the right to buy scheme, which is now being extended to tenants of housing associations (HAs). Legal Action fears it will only deepen the problem of public sector housing being lost and not replaced.
While the right to buy is a policy generally associated with Margaret Thatcher, the Labour party, in its 1959 manifesto, was one of the original champions of the idea. The Conservative government, when it implemented the policy in the Housing Act 1980, forced local authorities (LAs) to offer large discounts to encourage council tenants to buy their homes.
In power, Labour did not repeal the right to buy legislation, but did reduce the cost to taxpayers by cutting the cap on the discount from £50,000 to £38,000. The coalition government, as part of a policy to promote home ownership, increased this to £75,000 in 2012 and in the following year to £100,000 for tenants in London.
Councils used to receive half of the cash from the sales, but were required to use this to pay off debt instead of replacing the stock they had been forced to sell. From 2012, the government allowed them to use some of the cash from sales to replace housing stock, but this change of policy has only led to a small number of new houses being built. In 2013/14, 11,261 homes were sold by local authorities under right to buy,1Department for Communities and Local Government live tables on social housing sales, table 671: annual right to buy sales for England 1980–81 to 2014–15. but work commenced on only 2,115 replacements.2House of Commons Library Standard Note SN/SP/6251, Incentivising the right to buy (RTB), 23 June 2014, p19.
Until recently, only a few of the 2.3m HA tenants have enjoyed what is known as a right to acquire, with less of a discount available compared with council tenants. This is now set to change.
If the government succeeds in implementing this legislation, local authorities will lose yet more housing stock, but without gaining the capital receipts to replace it.
The idea of extending the right to buy to HA tenants was apparently a last-minute addition to the Conservative party manifesto. The strong suspicion is that the policy was intended to outflank the party’s main opposition and appeal to HA tenants, a section of the electorate who were traditionally more likely to favour Labour.
It was widely recognised that there would be considerable legal obstacles to legislating to force HAs, which often have charitable status and are independent of government, to sell off their assets at a discount. The pledge to extend the right to buy to HA tenants, though, was included in the Queen’s speech last year, which indicated the government’s determination to press ahead with the measure.
Over last summer, the government negotiated a deal with the National Housing Federation, which represents HAs, to allow their tenants, albeit with some exceptions, the right to buy. This agreement means the government has avoided the tricky issue of legislating for forced sales. Striking the deal was probably assisted by the fact that neither party will be picking up the bill.
This month, the Housing and Planning Bill is due to receive royal assent. One of its most controversial measures is to require English LAs to pay over the proceeds of the sale of ‘high-value’ vacant housing stock, so that this can be used to compensate the HAs for the discounts they will have to give their tenants under the right to buy policy.
This policy only affects England. The legislation will not be inflicted on the other parts of the UK. Indeed, the Scottish government has moved in the opposite direction, as the right to buy will be abolished north of the border from 1 August this year, and Wales looks likely to follow suit.
Much of the detail of how the transfer of cash from LAs will work in practice is expected to be contained in secondary legislation and could be subject to legal challenges. What is certain, if the government succeeds in implementing this legislation, is that LAs will lose yet more housing stock, but without gaining the capital receipts to replace it.
People should be given the choice of owning their homes, but not if it comes at the price of a net loss of affordable rented accommodation in the public sector. The right to buy for HA tenants was a policy idea designed for short-term political gain, but the cost of it will be paid for by the public purse and, ultimately, homeless families in the future.
 
1     Department for Communities and Local Government live tables on social housing sales, table 671: annual right to buy sales for England 1980–81 to 2014–15. »
2     House of Commons Library Standard Note SN/SP/6251, Incentivising the right to buy (RTB), 23 June 2014, p19. »

About the author(s)

Description: Steve Hynes
Steve Hynes is a freelance consultant and writer. He was previously director of LAG. He is a well-known commentator in the written and broadcast media...