Housing association chiefs debate Right to Buy extension

Published by Ross Macmillan for 24dash.com in Housing and also in Central Government, Communities, Local Government

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."

Here, three housing association chief executives debate:

Should the Right to Buy be extended to all housing association tenants?

Debbie Griffiths, Chief Executive, Housing Plus

The extension of the Government’s proposals for Right to Buy (RTB) would help thousands of social housing tenants to own their own home, but from a housing provider’s perspective the devil is in the detail.

The current proposal, if passed, would disadvantage many Large Scale Voluntary Transfers (LSVT’s) because of the terms of their sales receipt sharing agreements with the council. Money received by associations from a RTB sale under these agreements will only account for a small proportion of the cost of a new build to replace it, with the lion’s share of the money going to the council.

In addition, in rural areas, RTB will compound existing housing issues. If extended to all tenants it will see much-needed affordable housing sold off and it won’t be replaced due to cost, planning restrictions and nimbyism, which can prevent the development of affordable housing in rural areas. Hopefully the Localism Bill will ease this and we will start to see a relaxation in planning restrictions.

Plus it is likely that the stock that is bought will be popular family housing which will mean the mix of stock is adversely affected.

We currently have around 2,500 people on our waiting list, including families living in flats, and with just 450 vacancies a year we have a real shortage of affordable family homes. Often these are in areas where there are low average wages and house prices are high.

By extending RTB it will only make their wait more desperate and mean they have to move from villages and communities where they and their families have lived for generations. This could threaten the viability of some of our villages and I fear many will turn into places where only those who have high incomes can afford to live.

Dave Willis, Chief Executive, Wellingborough Homes

As a stock transfer organisation, 78% of our tenants have the Right to Buy.

I am certainly not against the principle of helping people towards home ownership but have doubts that the proposition will address the real need for us to simply build more homes.

Firstly, do we know the true scale of the potential market? How many existing tenants want to buy the home they live in and have the capacity to make it happen?

Since transfer we have completed just 59 RTB sales in four years - that is 1.5% of all those eligible.

This is perhaps not surprising when you strip away those living in flats (only 5% of our RTB sales are flats), the number of elderly tenants and the number reliant upon benefits.

Of those that remain income levels are low, an average of £22k per annum in our case. These households will then have to contend with a severely restricted mortgage market where lending conditions look set to become even tighter.

So, if we do sell how do we replace it and at what cost?

Our average income this year from RTB sales is £48k per unit. This would reduce to £36k per unit if the discount caps were removed. After allowing for debt we estimate a net income that is equivalent to 20% of the cost of providing a new-build replacement. How is this shortfall to be met, and if it is met how do we address the drop in the supply of social housing between selling the existing and building the new?

Finally, we should also consider the longer term use of RTB properties. These homes can be quickly snapped up by investors, who divide them up to profit from improved rental yield with implications for the sustainability of communities.

As local authorities are empowered to discharge their homeless duties to the private sector, how can we ensure that these households don’t end up living in former social housing homes while simply paying higher market rates?

Karen Armitage, Chief Executive, Stafford and Rural Homes

I don't believe offering Right to Buy to all housing association customers is the right solution to the current housing crisis in the UK.

Social housing is for those who need it and selling it off at discount cannot be morally right.

The solution to increasing home ownership is to provide incentives that help people get onto the housing ladder, but this should not involve selling off the limited supply of social stock which is in short supply.

The government has promised to build a new home for every social rented house sold. There is a significant problem here - replacement homes are needed in areas where they are sold not for creating a capital grant to build a house somewhere else.

A stock transfer housing association may receive as little as five to ten thousand pounds for a house sold and are then clearly not able to build one to replace it and depriving areas of any access to social housing where they have been sold.

The message from government seems mixed as in November 2010 the Housing Minister Grant Shapps was very critical of the social housing sector for wasting the 'welfare benefit' that was social housing.

He felt it was wrong that people should have a tenancy for life and access to housing for long periods, which had been subsidised by the public purse, and was actually a welfare benefit for those who needed it.

Yet under Right to Buy we are being told that it is acceptable to sell a socially rented home - seen as publicly subsidised - to people who have not established that they are in need of it, and to offer that opportunity to tenants at a greater discount whilst reducing housing benefit to renters cannot equitable.

There needs to be a much more joined up approach to tackling the difficult housing issues facing this country and I would urge the government to work with social housing providers to find the solutions.