Whitehall should fund costs of Right-to-Buy extension, say MPs

10 Feb 16

MPs have today raised concerns about government plans extend Right to Buy to housing association tenants through a levy on local authorities.

In a report examining the controversial scheme, the communities and local government select committee, which has a Conservative majority, said plans to charge councils to fund discounts was “extremely questionable”.

Under the Housing and Planning Bill, councils will be required to make a payment to the Department for Communities and Local Government to fund the extension. This will be calculated using the market value of the high-value vacant housing owned by the authority, which is then intended to incentivise sales of these properties.

However the committee said programmes such as this would usually be funded by Whitehall.

"We believe in the principle that public policy should usually be funded by central government, rather than through a levy on local authorities, especially as [in this case] the impact of this levy will fall only on some local authorities, yet will be applied nationally," the report stated.

Committee chair and Labour MP Clive Betts added there were concerns about “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 added: “The government needs to set out in more detail on 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.”

In addition to the extension of Right to Buy, MPs warned that the imposition of a 1% rent cut for social landlords in each of the next four years will lead to a significant reduction in housing associations’ income. This threatens to damage the ability of housing associations to build new homes, they warned.

In the long term, the government should free housing associations to set their own rents as part of its proposals to deregulate the sector in an effort to reverse the classification of associations as public bodies.

Responding to the report, a Department for Communities and Local Government spokesman said that anybody who works hard and aspires to own their own home should have the opportunity to realise their dream.

“Our voluntary agreement with the National Housing Federation will ensure that more than 1.3 million housing association tenants will have the opportunity to do so, while for every home sold there will be at least one additional property built,” he added.

“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. We have always been clear that more details on the sale of high value vacant housing will be set out in secondary legislation.”

Local Government Association housing spokesman Peter Box said councils want to help the government shift spending from benefits to bricks and support measures to help people into home ownership. However, the umbrella group agrees the extension “should absolutely not” be funded by forcing councils to sell off their homes.

He added: “Rather than funding the sale of affordable homes by selling other affordable homes, the government should fund the Right-to-Buy extension by working with councils to raise £13bn by building more homes on public land.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, urged ministers to consider the MPs’ report “very carefully”.

“Many people aspire to buy a home – and no-one is saying the government shouldn’t support that – but as the committee points out, we cannot forget people who simply cannot afford to buy, even with extra support,” she said.

“We need to make sure we are providing a range of housing for all, including more homes at rents that are truly affordable. We fear that some of the government’s proposed policies will make that more difficult.”

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