More Right to Buy – what will go wrong
Right to Buy likely to go wrong
Worryingly the Queen’s Speech confirms that there will be a bill to extend the Right to Buy to tenants in Housing Associations.
The TUC opposes this measure on two grounds; that the funding model of housing associations would be seriously damaged by such a change; and that we do not believe sufficient replacement homes will be delivered, meaning that the net social housing stock is likely to fall.
Most housing associations fund building new homes by borrowing against their existing stock, so if their assets are to be sold at a discount, then it will cost more to borrow and they can build less.
In addition, a fair proportion of Housing Associations are charities. There is a real danger that a universal Right to Buy in this sector will depress the ability of these socially useful bodies to attract donations or sponsorship.
David Orr, Chief Executive of The National Housing Federation, which represents Housing Associations that provide about 2.5 million homes says: “All the efforts of housing associations …are geared towards ending this housing crisis by building new homes and regenerating existing homes where that is the best solution. The Right to Buy makes that more difficult. ”
On the rate of replacement for homes sold off, when the previous government strengthened the Right to Buy (RTB) for local authority tenants it promised to provide one-for-one replacement homes by then housing minister Grant Shapps (2011). In fact, the amount of replacement social homes fell far short of the target, with just one new home built for every six sold.
David Orr gives this example of what went wrong: “Phoenix Community Housing in London recently sold a home worth £210,000 on the open market for just over half of that. From the proceeds, some went back to the Treasury, some to the local authority leaving a receipt of just £27,000.”
Gregg Clark, the current housing minister, said that the last government’s one-to-one pledge only applied to “additional” housing sold after the new discount was introduced and that the promised new homes would eventually be built.
I don’t really know what that means, but what is needed is a genuine commitment to increase the number of social homes to start dealing with the 1.3 million waiting list.