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'right-to-buy' funding model criticised by members of parliament Housing Plan

Image copyThe way the government intends to pay for its plans to allow social tenants in England to buy their homes is "extremely questionable", MPs say
The Commons Communities Committee criticised the funding model for the right-to-buy scheme, which will see housing associations reimbursed for selling homes to tenants at discounts.

Right to Buy: Can you afford it?

7MPs say it should be paid for directly rather than via council house sales.

Ministers say it will help create a million new homeowners by 2020.

The government says it is one of a number of measures that will see 400,000 new affordable homes built by 2020-21.

The extension of the longstanding right-to-buy scheme for council-house owners to housing association tenants in England was one of the Conservatives' main manifesto pledges at last year's election.

Under the voluntary scheme, which is currently being piloted in five areas, housing associations will be expected to sell properties to tenants interested in buying them at a discount of £103,900 in London and £77,900 outside the capital.
'Unresolved issues'

Housing associations, which can reserve the right not to sell in certain circumstances, will retain the proceeds of sales and will be expected to build one new affordable property for every property sold on a national basis within a period of three years.

The government has said the scheme, a centrepiece of the Housing Bill currently going through Parliament, will be paid for by the sale of high-value council homes when they become vacant.

The legislation envisages that local authorities make payments to government based on the value of their housing stock, on the expectation that more expensive properties would be disposed of when falling empty.

How will new scheme work?

Council housing in central LondonImage copyrightPA

Potential buyers must have been tenants for at least three years, the same as with council tenants.
The government says that means up to 1.3 million housing association tenants will be eligible in England. Around 500,000 housing association tenants are already eligible for some discounts. So the new scheme will extend rights to a further 800,000 tenants, and increase the discounts available.

Rt Hon Prime minster David Cameron MP Defending right-to- buy during election campaigning last year 

But critics have questioned whether this will be sufficient to reimburse housing associations, amid claims the scheme could cost more than £11bn if everyone entitled to buy their home took up the opportunity. There are also doubts whether associations will be able to replace homes on a one-for-one basis, given the lack of suitable land and bottlenecks in the planning system.

Cameron on Housing: Right to Buy for Housing Association tenants

In their report, the cross-party committee expressed concerns about what it said was a "levy" on local councils and urged the government to set out "fully costed" details of how it would be funded.

'Detrimental effect'

It warned that a large number of properties sold through the existing right-to-buy scheme had quickly been put on the rental market and that it might be necessary to limit the ability of housing association tenants to become private sector landlords.

Conservative Right To Buy Promises Analysed
It also called for safeguards to protect the amount of affordable housing in rural areas, including allowing housing associations to offer tenants "portable discounts" to purchase an alternative property to the one they live in where it was difficult to replace.
Clive Betts, the Labour MP who chairs the committee, said the success of the policy should be judged on how many new houses were built and not whether more tenants ended up owning their own home.
"We are concerned that there are a number of unresolved issues with the government's policy which could have a detrimental effect on the provision of accessible and affordable housing, particularly affordable rented property," he said.
"The government needs to set out in more detail how it will meet its target of at least one-for-one replacement of the sold homes, particularly given issues such as the availability of land, the capacity of the building industry and the uncertainty of income from council home sales."
The scheme, which is partly designed to reverse the steady decline in home ownership levels in recent years, is currently being piloted in Norfolk, Oxfordshire, Surrey, Merseyside and a number of London boroughs.

'Realising a dream'

The Local Government Association said councils could be forced to sell a minimum of 22,000 homes depending on how the government defined "high-value" and that the government should, instead, look at ways of freeing up public land for new homes.
"Councils want to help the government shift spending from benefits to bricks and support measures to help people into home ownership but we agree with the committee that the right to buy extension to housing association tenants should absolutely not be funded by forcing councils to sell off their homes," said the LGA's housing spokesman Peter Box.
The Department for Communities and Local Government said more details about the sale of vacant council houses would be set out in due course but the principle of using them to pay for new house building was the right one.
"There are billions of pounds locked up in local authority housing assets. It is only right that when they become vacant they are sold enabling the receipts to be reinvested in building new homes and supporting home ownership through right-to-buy," a spokesman said.
He added: "Anybody who works hard and aspires to own their own home should have the opportunity to realise their dream."
The Labour government in Wales is planning to abolish right-to-buy entirely while in Scotland it will be phased out by August. 

A separate scheme exists in Northern Ireland.Not all properties can be sold though tenants can’t buy certain types of Housing Executive or housing association properties, including:

  • 1 and 2 bedroom ground floor accommodation
  • sheltered housing.

Northern Ireland Private Tenants 

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