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Housing Minister addresses CIH Conference 26/06/2015

Housing Minister, Brandon Lewis, addressed the CIH conference in Manchester on Thursday 25 June in his first major speech since being reappointed as Housing Minister. He gave little hope that the government was about to rethink on the policy of forcing councils to sell high value stock to help fund the extension of RTB to housing associations.

 

He said that housing was one of the most important jobs the government had to address and commented that the electorate had given the Conservative Government a mandate to consolidate and build on the policies introduced under the previous coalition government. The Minister emphasised the government's intention to prioritise and support an increase in home ownership, supporting the aspiration of working people to own their own home.

 

He made it clear that the extension of the RTB to housing associations was central to the government's plans to extend home ownership and help first time buyers and reaffirmed the government's commitment to reinvest money from sales into more homes. He gave an absolute assurance that every home sold will be replaced on a one for one basis.

 

With the extension of the Right to Buy central to the government's vision for housing over the next five years, he also pledged to:
 

  • Deliver 200,000 starter homes sold at 20% discount to first time buyers under 40
  • Invest £38billion of public and private investment to deliver an extra 275,000 affordable homes
  • Create a £1billion brownfield fund to get land ready to build on and make way for 400,000 new homes.

 

He indicated that alongside the extension of the RTB, funded in part by the sale of high value council housing, the Housing Bill to be introduced later this year will include:
 

  • A requirement to compile a Register of Brownfield Land with 90% of that land granted planning consent by the end of the parliament
  • A new Right to Build with councils identifying shovel ready plots for self-builders
  • Measures to speed up the Neighbourhood Planning Regime.

 

In answers to questions he was explicitly clear in his assurance that all properties sold under the new RTB and the sale of high value housing stock would be replaced on a one for one basis.

 

In answer to a question about whether the government would increase HRA debt caps, he was clear that he expected stock retained councils to take advantage of any existing headroom in the debt caps and claimed that there was up to £2.5billion unused spending power in headroom available to councils. He did, however, indicate that he would be prepared to talk to councils who had utilised all their available headroom up to the debt caps referring to the additional £300m spending power that had been made available in the last government.

 

In answer to a question about whether the new extended RTB would be made available to housing association properties built with no public subsidy, he refused to give a direct answer saying that much of the detail had yet to be worked out and details would be announced with the new Housing Bill.

 

ARCH CEO, John Bibby, comments:

 

It is absolutely clear that the government intend to press ahead with the extension of the RTB to housing association tenants and the intention to require councils to sell high value stock to help fund this. However there seemed to be some rowing back from the previous assumption that the sale of high value council housing would fully fund the government's plans for extension of RTB, one for one replacements and a £1billion brownfield fund - something ARCH has been saying from the outset.

 

There seems little likelihood of a general lifting of HRA debt caps but perhaps a small hint that the government might make some additional borrowing available against which councils who had spent up to their HRA debt cap may be able to bid. The message was clear - the government expect councils to use any headroom in their debt cap to build new homes and the sector must be ready to explain why any available headroom has not been fully utilised.

 

In terms of the extension of RTB to housing associations, it is clear that the government will drive through this manifesto pledge but the details have yet to be worked out. There was a clear shift in emphasis that while the linked policy of the sale of high value council housing is expected to help fund this policy, there seems to be a growing acknowledgement that such sales will not fully fund the government's ambitions to compensate housing associations and fund one for one replacements. ARCH will continue to work with other housing organisations including the NFA, CIH and LGA to influence government policy in this area, ensuring that if we can't persuade the government to abandon proposals for the forced sale of high value council housing, we can mitigate the significant impact such a policy is likely to make on council's HRA business plans.

 

Although there is still some clarity needed in the statistics and the overall rate of replacement is currently 1 in 5, the Minister made great play that councils had achieved one for one replacement of additional homes sold in the first year of the re-invigorated RTB for council tenants (recognising that under the deal councils have three years to replace any homes sold). ARCH needs to ensure that the government is reminded of this, if and when any pooled receipts from the sale of high value council housing is made available for one for one replacement, to avoid the housing association movement laying claim to the majority or all of that funding.    

 

We need to see the detail of what the government propose in regard to the sale of high value council housing, however ARCH will argue that stock retained councils and their tenants are already funding RTB discounts for council tenants through their HRA business plans. If the RTB is extended to housing association tenants, council tenants shouldn't be asked to pay twice and cost of RTB discounts for housing association tenants should be funded by the exchequer and/or the housing associations, and housing association business plans should not be cross subsidised by stock retaining councils and their rent payers.

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