Warning over Right to Buy Risk

A high proportion of homeowners who were bailed out by the government’s mortgage rescue scheme in the north of England bought their homes under the right to buy. Figures from housing associations that run the scheme, which launched in 2009, reveal a major north-south divide, with some areas seeing as many as 50 per cent of all mortgage rescue applications for right to buy properties. The revelation has prompted fears that the move to reinvigorate the 1980s policy could lead to a fresh round of financial problems as up to 100,000 tenants attempt to capitalise on increased discounts of up to 70 per cent. Read more on Inside Housing.

Right to Buy and The '12,700 Lost Council Homes'

Nearly 13,000 homes sold under the Right to Buy (RTB) up to 2015 will not be replaced, according to construction union Ucatt who says it has "exposed flaws" in the Government's one-for-one pledge. As part of the scheme the Government wants to replace every home sold with a new one. However, in a stinging response to the CLG, Ucatt has highlighted that nearly 13,000 homes will be sold between 2011-15 without the funds going towards new housing.
This is because the one-for-one pledge only covers additional homes sold under the Right to Buy scheme and not the 12,700 properties the Government had already estimated would be sold under the current arrangements between 2011-15. Read more on the Ucatt website.

Housing Association Tenants’ Right to Buy – Parliamentary Written Answer

Lord Kennedy of Southwark: To ask Her Majesty's Government what plans they have to extend the right to buy scheme.
The Parliamentary Under-Secretary of State, CLG (Baroness Hanham): We have announced our intention to revitalise the right to buy scheme by significantly increasing discounts. In our consultation paper Reinvigorating Right to Buy and one for one replacement, published on 22 December 2011, we propose to raise the upper limit on the right to buy discount entitlement to £50,000 throughout England. The proposal applies to those tenants who currently have a right to buy or preserved right to buy. There are no plans to extend the right to buy to housing association tenants who have the right to acquire or to tenants without a right to purchase.

Battle for ‘Right To Own’ Heats Up

Frustrated tenants’ groups have called on the government to publish a consultation on ‘right to own’ regulations - after a delay of almost a year. The CLG said it will be publishing a long-awaited consultation ‘shortly’ on new regulations which would make it easier for tenant groups to take ownership of their estates - and force councils to co-operate with them. The regulations could trigger a wave of tenant-led stock transfers. The CLG originally said it hoped to launch the consultation in February 2011, but it has been delayed. The plans are likely to oblige councils to arrange a feasibility study to examine tenants’ transfer proposals and provide financial support. Read more on Inside Housing.

Stock Transfer Councils in Plea over RTB Receipts

Councils are calling for the government to adapt the new right to buy policy, amid fears authorities that have transferred properties to housing associations will be unable to pay for replacement homes. Government proposals to increase the discount available to council tenants looking to buy their homes apply to around 600,000 people with preserved right to buy, living in homes owned by large-scale voluntary transfer organisations. However, agreements made between councils and LSVTs at the time of transfer over how future right to buy sales are distributed mean councils that have transferred stock will be in a much worse financial position than those that have not. While LSVTs tend to retain a set amount of sales receipts to offset loss of rents, councils are left with the remaining sale price. Large discounts of up to 50 per cent will reduce this receipt, casting more doubt on the ability of some councils to deliver the one-for-one replacement housing promised by the coalition government. Read more on Inside Housing.

Housing Association Chiefs Debate Right to Buy Extension

Calls to extend the Right to Buy to all housing association tenants have been greeted with a mixed response. Housing association Home Group, which owns more than 50,000 homes, argues the measure could inject "£68 million into the economy", while others have warned it's "not the right solution to the current housing crisis." Read what HA Chief Executives have to say on 24dash.

Economy Could Gain £68bn from Right to Buy Extension

The Government could inject more than £68 billion into the UK economy by extending Right to Buy opportunities to housing association tenants, according to one of the UK’s largest registered landlords. Home Group - which owns more than 50,000 properties - has released figures which show the construction sector could widely benefit from a change in legislation. The housing group says that one fifth of housing association tenants currently prevented from buying their homes would be ready to make the move – representing around 200,000 sales. Home Group says that with the promise by the Government to see a new home built for each property sold – and with the average new housing association property costing £120,000 to build – £24 billion would directly be spent in the construction sector. Read more on the Home Group website.

Councils Fear RTB Won’t Deliver Homes

Government plans to increase right to buy discounts will fail to deliver replacement homes, local authorities fear. A consultation on plans to revitalise the right to buy was released before Christmas, proposing a new maximum discount of £50,000. The previous maximum discount varied but was as low as £16,000 in some areas. The consultation reiterated the government’s commitment to providing a new affordable rent home for each council home sold. However, some authorities have claimed government caps on borrowing would restrict their ability to replace stock. The CLG’s impact assessment shows councils would need £40,000 to £50,000 in receipts from each home to fund a replacement. The average council stock price in some parts of the north is less than £70,000, which could leave councils with less than £25,000 in receipts to replace a sold home. Read more on Inside Housing.

'Right to Buy' Should Be Unlocked For Housing Association Tenants – MPs

A million housing association tenants should be given the ‘right to buy’, according to leading backbench MPs David Davis and Frank Field. The think tank IPPR is publishing a paper by Davis and Field arguing for ‘Right to Buy 2.0’. In their paper, Davis and Field show that since the Government introduced ‘Right to Buy’ in 1980, much of the remaining council stock has been transferred to housing associations. They argue that a million tenants who live in housing association properties should be given the right to buy their homes, with all of the funds generated being reinvested in new social housing. Download a copy of the report from the IPPR website.

Right to Buy: Future Council Tenants 'Set for Higher Rents'

An expert has warned that the Government's reinvigorated Right to Buy (RTB) scheme is good for current tenants - with attractive discounts on offer - but will leave future tenants paying more expensive rents. Grant Shapps says he is committed to replacing each home sold through the programme with a new one let at a higher rent. This is so councils and housing associations can borrow against future revenue streams to replace the sold stock, as the cash received per sold home will only be a fraction of the build cost of a new one. Responding to the RTB consultation, former Housing Corporation boss Steve Douglas warned the deal would leave future tenants with higher rents. He said: "The policy is more 'buy cheap now, and rent more expensive later. It’s clear, the sold one build one pledge only works if local authorities and housing associations are prepared to play ball and increase their borrowing against future rental streams on the one hand and discount land receipts on the other.” Read more on 24dash.

Right to Buy Discounts to Treble

The government will treble the discount available to council tenants looking to buy their homes in some parts of the country as details of the reinvigorated right to buy scheme have emerged. The Communities and Local Government has unveiled its consultation paper on the right to buy, announcing proposals to increase the cap on discounts to £50,000. The new cap would double the maximum discount available in much of the country, while trebling it in most parts of London. CLG said that the consultation will consider the different methods in which the receipts can be used to deliver replacement affordable rent homes on a one-for-one basis, as pledged by the government. Download a copy of the consultation from the CLG website.

Affordable Housing: Finance – Parliamentary Written Answer

Austin Mitchell: To ask the Secretary of State for Communities and Local Government what proportion of the receipts from the sale of local authority-owned homes will go to local authorities for the construction of new social housing.
Grant Shapps: Local authorities currently retain all the receipts from the voluntary sale of local authority-owned homes, and 25% of the receipt from right to buy (or similar) sales. These receipts may be used to fund the building of new social housing, but that is a decision for each authority. My Department intends to consult shortly on how, in future, right to buy receipts can be used to fund replacement social housing at affordable rents on a one-to-one basis either through registered housing associations or local authorities.

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.

Right to Buy Scheme – Parliamentary Written Answer

Hilary Benn: To ask the Secretary of State for Communities and Local Government what assessment he has made of the potential effect on rent levels for local authority homes of the planned increase in right to buy discounts.
Grant Shapps: Increasing Right to Buy discounts and reversing the last Government's policy of making cuts to the Right to Buy will have no effect on the social rents of any local authority tenant.

Housing: Finance – Parliamentary Written Answer

Hilary Benn: To ask the Secretary of State for Communities and Local Government what proportion of the receipts from local authority housing sales he expects will go to local authorities to help them build new houses.
Andrew Stunell: The Government will consult shortly on how receipts arising from additional homes sold under the right to buy will be used to fund new affordable homes.

Flagship Tory Council Presses Government on Right to Buy Receipts

Hammersmith and Fulham (HandF) Council has called for local authorities to be allowed to retain all receipts from sales under the new Right to Buy scheme to enable them to build more affordable homes. The Conservative-controlled council has been actively lobbying Government for a change in Right to Buy policy after seeing a slump in sales from 245 in 2003 to 2004 to just seven last year. This slump can be attributed to the fact that the Right to Buy discount was slashed from £38,000 to £16,000 in 2004. Currently, when a social housing tenant buys their property under Right to Buy the majority of the proceeds go to Central Government but HandF says this must change if the Government is going to get close to the 'one for one' aspiration it set out in the Housing Strategy. Read more on the HandF website.

"We Need To Go For Growth"

The Prime Minister spoke to the Confederation of British Industry (CBI) at their annual conference in London. This extract covers housing.
“The shortage of credit and lack of confidence affects some parts of the economy more than others. One of the markets that is particularly blocked is the housing market. The consequence of the credit crunch is that the lenders won’t lend, the builders won’t build and the buyers won’t buy. Nobody wants another borrowing boom but when first time buyers on a good salary can’t get a reasonable mortgage the market grinds to a halt. And that ricochets round the economy hitting builders, retailers and plumbers alike. So this morning the Deputy Prime Minister and I launched a radical new strategy to support new mortgages for up to 100,000 people who would otherwise be locked out of home ownership. We’re also selling council houses house again and using the money to build more houses. And we’re rewriting planning rules so the construction industry can grow while protecting our green belt and National Parks and ensuring sustainable development. You have asked for a planning revolution. We are delivering it. We will restart the housing market and get the nation building again.” Read the rest of the speech on the Number10 website.

Housing Strategy: Shapps Sets Out Target for 200,000 Homes A Year

Grant Shapps wants to double the number of homes being built each year to alleviate the country's housing crisis. The number of houses built in England fell to a record low of just over 100,000 in 2010, the lowest overall number in any peacetime year since 1923. The Government will today (21 November) publish its long-awaited housing strategy setting out plans to increase supply over the next four years. The plans include;
*Using the Right to Buy proceeds to build 100,000 extra homes which be let at rents up to 80% of the market rent.
*Giving public sector land to developers and housing associations on a 'build now pay later' basis - which is expected to create 100,000 more homes.
*A £400 million fund to target housebuilding schemes that have stalled through a lack of development finance. The fund aims to "unlock" the construction of up to 16,000 homes, around 3,200 of which will be affordable properties.
This will be alongside measures already announced including a £1.8b billion fund to help build 170,000 homes up to 2015 - which will be mainly delivered by housing associations. Read more on 24dash.

Government Publishes 'Ambitious' Strategy to Tackle UK Housing Crisis

The Government today (21 November) published its long-awaited new strategy, Laying the Foundations: A Housing Strategy for England, to tackle the UK's housing crisis. Prime Minister David Cameron said policies announced in the 'ambitious' 100-page document would help to boost the economy, create jobs and give people the opportunity to get on the housing ladder. The Government also confirmed that it would consult shortly on proposals to increase discounts under the Right-to-Buy, giving social tenants the opportunity to buy the homes they live in. For the first time, the receipts from additional Right to Buy sales will be used to support the funding of new affordable homes for rent on a 'one for one' basis, which is expected to deliver up to 100,000 new homes and support 200,000 jobs. Download a copy of the strategy from the CLG website.

Treasury 'Stopping Councils from Building Extra 100,000 Homes A Year'

The Treasury is preventing councils from building up to 100,000 extra homes a year by continuing to snuffle 75% of the cash from Right to Buy (RTB) sales, according to the Local Government Association (LGA). Speaking about the Government's new home swap scheme for social housing tenants, Gary Porter, housing expert at the LGA said the scheme was great in principle, but wasn't the solution to the housing shortage. He said: "We certainly need to build more homes than we’re doing at the moment and the key to that is in the Treasury. "The Treasury is preventing councils from being able to deliver as many homes as they should be able to. We need some better changes to the Housing Revenue Account system to allow that to be implemented. We could build over 100,000 extra homes a year if we were allowed to keep all the capital receipts from the council houses we sell under RTB. At the moment the Treasury is proposing they take three quarters of those receipts away from us." Read more on 24dash.