Right to Buy extension won’t solve housing crisis says social housing sector

The extension of the Right to Buy programme for housing associations has come under fire from the sector which says that it won’t solve the housing crisis.

The Government’s intention to expand the controversial scheme to include housing association tenants was confirmed in today’s Queen’s Speech and has been met with dismay by housing bodies amid concerns that it will result in the loss of vital affordable housing.

“This policy is not a genuine solution to our housing crisis. An extension to the Right to Buy would mean that housing associations are working to keep pace with replacements rather than building homes for the millions stuck on waiting lists. At a time when we need to be increasing the overall amount of social housing, it is like trying to fill a bathtub with the plug taken out,” said Henry Gregg, assistant director of campaigns and communications at the National Housing Federation.

“What’s more, forcing housing associations to sell of their properties under the Right to Buy sets an extremely dangerous precedent of government interference in independent business.

“We fully support the aspiration of homeownership, but this policy does nothing for the 11 million private renters and three million adult children living at home with their parents. If there is £22.5 billion of public money available for housing, we should use it to build the homes the next generation needs, not just gift it to the lucky few already housed in housing association homes.”

Despite Government promises that each home sold would be replaced on a one-for-one basis Chartered Institute of Housing (CIH) deputy chief executive Gavin Smart expressed concerns that the programme would have a huge impact on housing authorities and local authorities as they are forced to sell valuable homes to fund replacement homes. He cited research which shows that between April 2012 and last September councils started or acquired 2,298 homes using Right to Buy receipts – just one for every 11 sold.

He also cast doubt on the Government’s pledge that replacements would be built in the same areas as the homes that have been he sold. This would be “heavily dependent” on land availability he says, and therefore extremely challenging in inner city and rural areas.

“The best way of helping people on lower incomes into home ownership is by increasing the supply of affordable housing,” he said. “CIH is ready to work with the government on the solutions that could make a real difference, for example investing in shared ownership and supporting local authorities on land and asset management to deliver more homes.”

Councillor Peter Box, chair of the Local Government Association's Housing board, said that the current Right to Buy system only allows councils to replace half or fewer of the homes that they have sold.

“The Government has rightly promised every home sold under these proposals will be replaced on a one-for-one basis and we need to make sure new proposals enable that to happen,” he said.

TUC general secretary Frances O’Grady expressed major concerns over the policy, saying: “The TUC is deeply concerned that this measure will undermine housing associations and their important role in providing families with affordable homes. Housing associations fund new homes by borrowing against their existing stock, but if the government forces them to sell homes at a discount then it will cost more to borrow and they will be able to build less.

“We can’t trust the promise that any homes sold will be replaced on a one-to-one basis as a similar promise from 2012 on council homes has already failed – just one new council home for every six sold has been built. Instead of selling off affordable homes to the private market, the priority for housing really needs to be building more homes, and especially more social housing. We estimate that the UK needs to build 1.25 million new homes by 2020 just to stop the housing crisis getting worse.”

While Jonathan Hulley, partner and head of Clarke Willmott’s housing and asset management team, has raised questions over the practicalities of implementing the scheme.

“Providing the number of homes that people need is a vitally important issue for the UK economy and local communities. Many housing association tenants already have a right to acquire their homes, but these proposals would help them buy their homes at much bigger discounts,” he said.

“This creates a complex issue for social housing providers, who have long-term investments which are based on rental income generated by the homes that they own. The impact that the right to buy policy has on levels of affordable housing is well known, and is one of the reasons why the Welsh Assembly Government is proposing to restrict it in Wales.

“Housing providers are concerned at the impact this proposal may have on affordable housing numbers and may even consider taking legal action to protect their assets. Housing associations have played such a key role in providing affordable housing and have had to remodel their business plans in the absence of grant funding. These proposals could put further pressure on their ability to deliver the homes that are badly needed. ”

The announcement will come as good news for housing association tenants “who have been presented with the opportunity to access the property ladder at very affordable rates” said Andy Frankish new build director at Mortgage Advice Bureau (MAB).

However he said that “while it is good to see that the government is actively seeking to extend homeownership to those with lower incomes, many with similar levels of pay in the private rental sector may feel at a disadvantage.”

He added: “A bolder step by policymakers would have seen a commitment to ensuring that high loan-to-value (LTV) lending to first time buyers is maintained through the extension of Help to Buy or a similar scheme. Ideally, this would have meant the government working with lenders to find the best means to boost homeownership.”

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