Housing association tenants ‘should have right to buy’

By:
5 Jan 12

One million housing association tenants currently excluded from the right to buy scheme should be given the opportunity to purchase their own home, according to a report published by the Institute for Public Policy Research today.

 

In Right To Buy 2.0, Conservative MP David Davis and his Labour counterpart Frank Field say the change would enable tenants to move into owner-occupation rather than receive a ‘subsidy for life’.

It would also generate funds that could be reinvested in new homes and also help to shorten housing waiting lists and reduce the time people spend in temporary accommodation.

Under the right to buy, council housing tenants can purchase their homes with a discount. But for housing association residents, the scheme applies only to those with secure tenancies started before 1989.

The government has launched a consultation on an overhaul of the right to buy. Ministers want to revitalise the scheme and increase the maximum discount to £50,000.

Davis and Field said any decision on discount rates needed to take into account the potential impact of extending right to buy to housing association tenants. In particular, it should consider the likely take-up of the scheme and the funds it could generate for new housing stock.

Setting a high discount would be attractive to tenants but would generate less capital for new house building, while a low discount would be less attractive to tenants, but increase the resources for new home building, they explained.

For the policy to succeed in increasing home ownership and the supply of new homes, it would also be ‘crucial’ that all funds raised from sales be spent on social housing, they added.

In a joint statement, Davis and Field said: ‘Preventing social tenants from owning their home ties up billions of pounds of public funds that could be better used to help people on to the housing ladder. ‘Reinvigorating and extending the right to buy would not only increase home ownership: by using all the funds raised to build new homes, the policy would lift the most vulnerable households in Britain off waiting lists, out of temporary accommodation and into a place they can call home.’

Housing minister Grant Shapps welcomed the IPPR’s contribution to the debate over housing and said the government was ‘determined’ to make it easier for everyone to get on the property ladder, including social housing tenants.

‘The previous government's restrictions on discounts meant right to buy became, for many tenants, nothing more than an empty promise. That's why we have already published proposals that will dramatically increase the discounts under right to buy, ensuring it once again becomes a meaningful tool to support social tenants who want to buy the home they live in,’ he added.

Gill Payne, director of campaigns and neighbourhoods at the National Housing Federation, welcomed the proposals to help social housing tenants own their home.

But she said the issue was ‘more complex’ than the IPPR report suggested.‘Increasing discounts to enable tenants to buy their home would result in less money for housing associations to build much-needed affordable housing.’

‘Even if right to buy receipts are retained by housing associations in full, once a property’s existing debt and associated costs are paid, often what remains would not be enough to fund the cost of building a replacement home,’ she added.

But in research published today, the Home Group housing association said opening up the right to buy to tenants would be worth £68bn to the UK economy as a result of billions being spent in the construction sector.

Chief executive Mark Henderson said a different approach would be needed to that used for council housing. ‘The way to make this work for our sector is for the government to use the legacy debt that is lying on the balance sheets of housing associations as a deposit to help tenants buy their own homes,’ he said.

‘Using the historic grant to pay part of the tenants’ deposits and then re-invest the remainder of the sale money to build a replacement property in or around the sale area would deliver one new home for each one sold.’

  • Nick Mann

    Nick Mann is a journalist for Public Finance and Public Finance International.

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