In a written Ministerial statement on 29 March
2018, accepting that the current restrictions around the
use of Right to Buy receipts are a barrier to delivery of more
homes, the Government said it would consult with the sector on more
flexible arrangements.
The Government issued the promised consultation paper entitled
"Use of receipts from Right to Buy
sales" on 14 August 2018 alongside the Social Housing
Green Paper, setting out proposals and options for reforms to the
rules governing the use of RTB receipts, including potentially
abandoning the the Government's current national one-for-one
replacement commitment.
The current arrangements were introduced in April 2012 as part
of Government measures to reinvigorate the Right to Buy. Local
authorities were enabled to enter into an agreement with the
Government to retain receipts above the baseline assumed in the
self-financing settlement ("additional receipts") to fund the
provision of replacement stock. The agreement specifies that
receipts are to be used within three years and cannot fund more
than 30% of the cost of a replacement unit. Receipts not used
within three years must be returned to MHCLG together with interest
of 4% over base rate.
ARCH has long argued for reform of the current arrangements
setting out the case for reform in both our submission prior to the 2017 Autumn
Statement and in our paper to the Government "Social housing we can all be proud of"
submitted prior to the publication of the Government's Social
Housing Green Paper.
The consultation paper proposes:
- To allow local authorities to hold receipts they currently
retain for up to five years; future receipts would continue to have
to be used within three years;
- To increase the cap on the use of receipts from 30% to 50% of
build costs for homes for social rent in "high demand" areas;
- To allow local authorities to "top-up" insufficient Right to
Buy receipts with funding from the Affordable Homes Programme of up
to 30% of build costs for affordable rent or, in "high demand"
areas, 50% of build costs for social rent;
- To set an upper limit based on to average build costs on the
price of dwellings acquired using receipts;
- To allow authorities to use receipts to provide homes for
shared ownership;
- To allow authorities to gift General Fund land to the HRA for
use for new housing provided it has been held in the General Fund
for a number of years;
- To allow a short window of three months during which local
authorities could return receipts without incurring interest;
- To replace the current target of one-for-one replacement of
"additional" homes old under the Right to Buy with a wider measure
covering net additions to the social housing stock held by both
local authorities and housing associations.
The consultation paper also invites views on whether there are
circumstances under which it would be appropriate to allow local
authorities to transfer receipts to ALMOs or Local Housing
Companies and on other flexibilities that would help local
authorities to use receipts more effectively to build new
homes.
ARCH Policy Adviser Matthew Warburton has produced an ARCH briefing paper for ARCH
members.
Views the proposals set out in the consultation paper are
invited to be submitted to the Government by 9 October.
The ARCH Executive Board will be considering its response to the
consultation paper at its meeting on 10 September. ARCH
member councils are invited to submit any views and comments for
inclusion in the ARCH response to Matthew Warburton ( Matthew.warburton@arch-housing.org.uk
).