LGA | Right to buy replacements in England falling sharply, councils warn


Media release | 11 August 2016

Right to buy replacements in England falling sharply, councils warn

The number of homes sold under Right to Buy (RTB) in England that councils have been able to start replacing fell by more than a quarter last year with national restrictions increasingly hampering their ability to build, the Local Government Association warns.

Councils only keep a third of all receipts from sold RTB homes and further complex rules and restrictions mean councils are struggling to rapidly replace them.

The LGA said the current RTB scheme needs urgent reform to ensure councils are able to replace housing sold quickly and effectively. Councils need to be able to retain 100 per cent of receipts from any council homes they sell and RTB discounts should be set locally to reflect local house prices.

Latest figures show 12,246 council homes were sold to tenants under RTB in England in 2015/16 but just 2,055 replacements were started by councils – a drop of 27 per cent on the year before.

The LGA forecasts that 66,000 council homes will be sold to tenants under the existing RTB scheme by 2020 and fear councils will struggle to replace the majority of these homes.

Local government leaders warn this drop in the number of much needed council homes will exacerbate the housing crisis, increase homelessness and housing benefit spending – at a time when there are 1.4 million people on council housing waiting lists.

Council leaders are also calling on government to make the forced sale of high value council homes voluntary and to allow them to keep 100 per cent of those receipts so that they can build new ones. The Government should fund the extension of RTB policy by working with councils to build more homes on surplus public land.

Amid growing demand for affordable homes to buy and rent, this should be part of a wider ambition to allow councils to resume their historic role as a major builder of new homes in light of the economic uncertainty created by the UK’s decision to leave the European Union.

Cllr Nick Forbes, LGA Senior Vice Chair, said:

“Current RTB arrangements are restricting councils from being able to replace homes being sold under the scheme. RTB will quickly become a thing of the past in England if councils continue to be prevented from building new homes.

“Housing reforms that reduce rents and force councils to sell homes will make building new properties and replacing those sold even more difficult. Such a loss in social housing risks pushing more people into the more expensive private rented sector, increasing homelessness and housing benefit spending.

Scotland has scrapped RTB, and Wales is looking at doing the same. Councils in England believe this policy can be made to work if they are able to build the replacements that protect essential local housing, and ensure future generations can also benefit from the scheme.

“If we are to stand a real chance of solving our housing crisis, councils need the funding and powers to replace any homes sold under RTB quickly and reinvest in building more of the genuine affordable homes our communities desperately need.

“Alongside the ability to borrow to invest in housing, councils need to be able to retain 100 per cent of receipts from sales, combine those receipts with other funding to build replacements and set RTB discounts locally so they reflect the cost of houses in the area.”

Notes to editors

  1. Latest figures on social housing sales (including RTB)
  2. The LGA set up a Housing Commission last year to explore how a renewed investment in the different new homes that people need can deliver significant wider benefits for communities. Over the past eight months it has heard from developers, planners, charities, health partners, housing associations and many others. Its interim report published last month includes calls for:
    • National backing for new local government housing delivery models building new and different types of homes, which could include new intermediate rent, rent-to-buy, modular housing, and co-housing options. This must coincide with a revitalisation of council house building by allowing councils to keep a greater proportion of Right to Buy receipts and to combine receipts with Homes and Community Agency funding.
    • Allowing councils to set planning fees locally so they can cover costs and continue to develop a proactive planning approach for unlocking housing growth, and developing powers for councils to ensure homes are built on sites where planning permission has been granted but building may have stalled.
    • Building a new market of homes attractive and suitable for older people better able to meet health needs and supporting moves which, in turn, would release more family homes into the local market. A sustainable funding model needs to be established to provide more supported housing options for vulnerable people.
  3. Four million working people will no longer be able to afford somewhere decent to live by 2024 and will need access to some type of affordable housing, research published by the Local Government Association revealed this month.

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