Housing Revenue Accounts – Parliamentary Written Answer

Mr Andrew Smith: To ask the Secretary of State for Communities and Local Government if he will provide resources to local authorities to compensate for rent loss from properties under the Right to Buy, following the reform of the Housing Revenue Account.
Andrew Stunell: We are committed to ensuring that every additional home sold under right to buy is replaced by a new home, and receipts from sales will be recycled towards the cost of replacement. The receipt needed to fund replacement will only be a fraction of the cost of a new home. This is because most of the funding for new affordable rented homes comes from borrowing by the provider against the future rental income stream; and, in many cases, cross-subsidy from the landlord's own resources, including land. Our proposal is that right to buy receipts will first be used to meet debt on additional properties sold, then will meet Treasury and council forecast receipts, and that the balance will be available for investment in replacement properties. Our initial modelling shows that the expected receipts will provide a sufficient contribution to the cost of replacement homes. We will set out detailed proposals in the right to buy consultation. We are committed to letting councils keep the proportion of the receipt needed to cover the housing debt associated with additional right to buy sales. This will ensure that the right to buy reforms do not have an impact on the viability of self-financing or independent social landlords.