The deadline for councils
to decide whether to take up the Government's offer to use RTB
receipts to build new homes is fast approaching. Councils have
until noon on 27 June to return signed agreements to the
government. If there are any ARCH members which have not yet made
up their minds how to respond, here are some points to
The Government has high hopes that it can revitalise Right to Buy
by hiking the maximum discount to £75,000. Publicity around this
plan has already, it seems, attracted a big increase in
applications in many areas.
That was to be expected, but it is too soon to tell how many of
these expressions of interest will translate into successful
purchases. Many applicants could drop out when they see the details
of the price they will actually have to pay or, more likely, when
they dip their toes into the frigid waters of today's mortgage
market. Take up is likely to vary significantly among areas,
dependent on local housing market conditions and the make-up of the
council housing stock.
Consequently there is a high degree of uncertainty attached to the
future flow of RTB sales and receipts, and to put together a
successful replacement programme, councils have to find ways of
managing this uncertainly. In many areas it will be impossible,
within the constraints imposed by the government, to plan for
one-for-one replacement, or anything like it. But partial
replacement is better than no replacement at all for any council
looking to meet housing need.
One obvious way to manage the uncertain flow of receipts is not to
plan for a separate "RTB replacement" programme, dependent for its
funding on a particular volume of receipts, and therefore
vulnerable if those receipts fail to materialise.
Far better to plan for a new-build programme substantially
supported through self-financing headroom, with RTB receipts
contributing to a number of additional units which may or may not
materialise without compromising the scheme as a whole. And, if the
worst comes to the worst, open market purchases are always
available as a way to spend an unexpected receipt bonus.
With a little ingenuity, any council should be able to find a way
to use its receipts locally and avoid having to return them for use
by the HCA, probably in another area altogether. It makes good
sense for every council to sign the agreement, even if it still has
to work out exactly how it is going to spend the receipts.
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