Is Right to Buy heading in the wrong direction?

By Daniel Fryd, Senior Consultant

Just when it looked like ‘Voluntary Right to Buy’ was firmly buried in the long grass, Communities Secretary James Brokenshire dug it out earlier this month and announced £200m to revive it as a new pilot scheme.

The new scheme allows housing association tenants in the Midlands to register online to buy their home at a discount, with places allocated through a ballot closing on September 16.

While the news will certainly be welcome to a select few Housing Association tenants in the Midlands, its use in actually helping solve the housing crisis is much more uncertain.

The ‘dream of home ownership’

Right to Buy has long been touted by the Conservatives as a way to increase social mobility and provide social housing tenants with a route into ownership. Since 2010, the policy has allowed almost 94,000 households to buy up the council homes they have lived in at a discounted rate.

Voluntary right to buy (VRTB) for housing association properties was then put forward as a Conservative manifesto commitment in 2015. Since then, every Housing Minister has remained conveniently quiet on the policy, making no commitments while it largely faded from public consciousness.

It comes as a surprise then that the VRTB scheme, which can only assist the decline in social housing stock, has suddenly reappeared now: in the same week as a Social Housing Green Paper which allocated no new money for social housing and set no target for future housing numbers.

Over 66,000 council homes have been sold through RTB since 2012 with only 17,000 replacements, so new homes are desperately needed – not a further sell-off.

Government has stated money from homes sold under the pilot will be given to councils to fund one-for-one replacements, but councils are likely to be dubious given they have barely been able to replace 25% of the stock that has been sold off. Early reports from Inside Housing suggest around 3,000 homes will be sold across the Midlands under the Pilot, so there will be plenty of replacements needed.

Hope for council homes

It is not all bad news however. MHCLG released a wider consultation alongside the Social Housing Green Paper on allowing councils to set all RTB discounts locally and keep 100% of receipts from homes sold. This would allow councils across the country to reduce the discount and could help them lower demand if they need to retain some of their stock.

Following publication of the new NPPF, the Housing Revenue Account borrowing cap is also being raised “in areas of high affordability pressures” by up to £1bn over the three years from April 2019. This could give London councils under severe housing pressure like London Borough of Waltham Forest more capacity to replace homes sold under RTB.

The government has also abandoned the “high-value asset levy” policy, meaning councils will no longer have to worry about selling off their most valuable homes in the future, with little prospect of replacing them.

Moving ahead

145,000 new affordable homes are needed every year by 2031, according to the National Housing Federation, so each of these new policies are a positive step towards achieving this. Schemes like VRTB, meanwhile, will not help achieve this. It might even hinder it.

Which is why the government’s decision to press ahead with the VRTB pilot at this time seems bizarre. The Social Housing Green Paper’s new ‘1% ownership’ scheme for council tenants would have been the perfect replacement policy for Government to offer tenants as an opportunity to own their home.

Brokenshire is pressing ahead, however, and the pilot scheme will run until spring 2020 when MHCLG will decide whether to roll the scheme out to the rest of the country.

If the Midlands councils involved really can find a way to replace every single home they sell by 2020, then perhaps the scheme will prove itself successful. If not, the Government should muster the courage to chalk the policy up as a failure and get on with the job of building more homes, not selling them off.