Housing Association tenants should also get the right to buy
Mark Henderson is the Chief Executive of the social enterprise Home Group, one of the leading national providers of affordable and supported housing within the UK. He says the right to buy should apply to Housing Association tenants as well.
In the 1980s, the ‘Right to Buy’ gave the opportunity for millions of families to get onto the housing ladder and transformed housing estates by creating mixed communities. Thirty years on, ‘Right to Buy’ is once again at the forefront of the discussion around how we not only meet today’s housing need but also how we promote opportunity and greater social mobility.
Last year only 2,300 homes in England were sold under the scheme, down from the 2,870 sold the previous year. In fact, over the last decade figures recently released by Shelter’s new housing databank show that the number of ‘Right to Buy’ sales fell by 97% in less than a decade.
The announcement of a new phase with that critical ‘one for one’ commitment is very much to be welcomed. As a registered provider Home Group does recognize that there is a ‘Right to Acquire’ but given we have only sold 24 properties in the last five years it’s clear that it too is a policy desperately in need of reform.
If the government is committed to promoting aspiration and homeownership then why not extend the new phase of right to buy to housing associations?
There are after all strong parallels. Just as is the case with local authority stock, homes in the registered provider (RP) sector have been built with the assistance of grant. Although tenancies provided through RPs are not exactly the same as those provided to council tenants, many of the rights available to tenants in council housing apply in some form in the RP sector. Therefore there is a clear case for extending the Government’s revised right to buy policy to housing associations.
Here’s just how we think it could be done. Properties could be offered to tenants at a value which would cover the build cost of a new affordable home of a similar size locally. Consistent with the ‘one for one’ principle, one new home would be built in the local area on the back of each sale. Even in the small minority of cases where the sale receipt doesn’t cover the cost of a rebuild the RP would be able to use the additional borrowing capacity of the new property under affordable rent to plug the construction gap.
The key element in making this work is having the necessary deposit when seeking a mortgage. Government could facilitate that. As housing association properties were built using an element of Government grant, each property contains some grant. That could be recycled when a sitting tenant invokes the Right to Buy. When a house is sold rather than transfer all of the sale proceeds (including the historic grant) to the housing association as currently happens, Government could ‘gift’ a proportion of the grant to the tenant to use as a deposit on a mortgage. This would in one move provide thousands of hard working families with the deposit they need to achieve the dream of owning their home.
I recognise the concerns of the Treasury but the historic grant does not sit on either the Communities and Local Government or HM Treasury books as an asset. In short there is no adverse impact on the public finances to formally writing the grant off in this way.
As the level of historic grant used to build individual properties has varied over time, similar property types could contain significantly different levels of grant. A way of smoothing out historic grant rates must be found to ensure fairness and provide a much needed level of certainty to both the tenant and housing association. This could take the form of an average grant rate per property type, or perhaps, a percentage of the home’s value per property type.
This innovative model of affordable home delivery could help at several levels. It would move the sector away from the reliance on Government grant; help increased numbers of tenants into homeownership and as a consequence of the increased borrowing capacity deliver additional affordable homes. Crucially against a very difficult financial backdrop this would not require ‘new’ government money but the inventive recycling of historic grant.
Government can open up an innovative route for hard working families to own their own home whilst also delivering more homes. We hope that Ministers will realise the opportunity to make this new phase of ‘Right to Buy’ as successful as the last.