Use right to buy revenue to build more social housing, MPs urge

29 May 08
The government must allow councils to use the money raised from housing sales under the right to buy scheme to build more homes, MPs have urged.

30 May 2008

The government must allow councils to use the money raised from housing sales under the right to buy scheme to build more homes, MPs have urged.

The Commons communities and local government select committee says an extra 50,000 social rented homes a year are needed to keep up with demand – more than are being built.

'Right to buy sales, coupled with the inability of local authorities to reinvest the proceeds, have been a major factor in the decline in the stock of social rented housing,' its report says.

Since 2004, councils have received 25% of right to buy proceeds through the housing revenue account, with the sales already below market price, The supply of rented housing notes. It cites Sheffield, where properties with a market value of £57m were sold but the council received less than £9m.

There is a 'widespread consensus' that the HRA system is not working, the report says. 'We urge the government to make reforms to allow right to buy receipts, and any borrowing taken against this income, to be easily and rapidly used by councils to build much needed homes.'

The Local Government Association backed the recommendation. Senior policy consultant Caroline Green added that increased financial flexibility 'needs to be part of a fuller look at the HRA system'.

The report suggests limiting right to buy, to help tackle 'acute shortages' of social housing.

Housing minister Caroline Flint said: 'Last year was the first time since 1983 that we built more social houses than we lost through right to buy, and we are going further with a major package of reforms.'

This would be backed up with £8bn of investment to increase the number of social homes to 45,000 a year by 2011, she added, with 'a goal of 50,000 a year in the next Spending Review'.

The report also warns against 'buy-to-leave' property owners, who keep homes empty while their capital value appreciates.

PFmay2008

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