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Extension of the Right to Buy to Housing Association tenants: proposals included in Conservative manifesto 14/05/2015

ARCH Briefing 18/2015


Key points

  • The Queen's Speech on 27 May is likely to include a Housing Bill which will include proposals to extend the Right to Buy to all housing association tenants.
  • Councils will be required to sell "higher value" homes as they fall vacant in order to fund the payment of discounts to HA tenants as well as the provision of new homes to replace those sold both by HAs and councils, together with a £1 billion Brownfield Regeneration Fund.
  • "Higher value" homes are defined as those falling into the most expensive third of properties - including privately owned properties - in their area.  The Government will consult on whether "area" for these purposes should mean the English region or "smaller housing market areas".
  • As proposed the "higher value" thresholds above which properties would have to be sold range from £80,000 for a 1 bedroom property in the North East to £790,000 for a 4 bedroom property in London - but these may change. 



The Conservative manifesto pledge is to give all housing association tenants a statutory Right to Buy on the same terms as enjoyed by council tenants. Some details about how the policy would work are included in a Conservative press briefing issued alongside the manifesto. Discounts for HA tenants, together with replacement homes and a Brownfield Regeneration Fund work £1 billion over 5 years would be funded by requiring councils to sell existing council housing valued among the most expensive third of properties of that type in their area as they become vacant. The briefing states that vacant homes sold would be replaced "in the same area" with 'normal affordable housing". It includes a table which shows for each English region the 'higher value" threshold above which homes would be required to be sold as they become vacant. This suggests that the relevant definition of "area", both for the calculation of the threshold and the commitment to replace, is the region; however the briefing states that the Government will consult on whether thresholds will be set by region or by "smaller housing market areas"


Sales of higher value council homes is expected to raise £4.5 billion a year, based on the assumption of 15,000 sales a year at an average price of £300,000. It is expected that the net receipt after repayment of debt will be sufficient to fund the payment of discounts to HA tenants and replacement of sold HA and council dwellings, while still leaving £1 billion to fund a Brownfield Regeneration Fund. It seems likely that replacement costs have been calculated assuming that receipts will contribute 30% and the balance will be funded by setting "affordable' rents on the dwellings provided.


ARCH Comment

Many of the details of these proposals remain unclear, and may not have yet been decided.


Some of the assumptions underlying the figures provided may not be sustainable. They assume an annual turnover rate of 7.3% on what is likely to be among councils' most popular stock, which seems unrealistically high, as does the assumption that sales will average £300,000 a dwelling.


The choice of area for calculating the higher value thresholds has significant implications for the distribution of sales among councils. Regional thresholds would hit some councils hard while leaving others unaffected, while smaller areas would tend to spread the incidence of sales more widely.

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