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Housing Association Sales

Volume 22: debated on Monday 19 April 1982

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10 pm

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Budgen.]

It may come as no surprise to you, Mr. Weatherill, but it certainly surprised me, to learn that the housing association movement has roots going back to the thirteenth century. In 1235, St. Lawrence's hospital was founded to provide accommodation for two female lepers. More recently, particularly during the Industrial Revolution, we find that a number of housing trusts were set up by philanthropists such as Peabody and Guinness to provide accommodation for those living in slums and unable to afford decent healthy accommodation for their ample families.

As a result of the problem becoming more acute, and in response to greater expectations in respect of living accommodation, the major role in this sphere appears to have passed to the local authorities by the end of the First World War. Vast council estates were constructed in the 1930s, including that at Becontree and Dagenham, which was the largest estate of its type in the world. This is partly in my constituency. The new major housing role brought with it opportunities to indulge in social engineering, if the late Herbert Morrison, the then Leader of the LCC is to be believed. He boasted that he could convert a safe Conservative seat into a Labour-held seat in 15 years and proceeded to prove it.

However, in achieving this objective up and down the country, new problems were created in both sociological and economic terms. After the Second World War the deliberate policy of heavily subsidising council rents created a large gap between the owner-occupier and the municipal tenant, particularly as severe rent control was steadily killing off the private rented sector. To bridge the gap, and avoid the creation of two nations—one half council tenants and the other half owneroccupiers—attention was turned towards expansion of the housing association sector and a large variety of alternatives were put forward.

In 1964 the Housing Corporation was brought into being to encourage these various projects and maintain a form of effective control acceptable to Government, because much of the money being used was provided from public sources. At that time a recession had hit the construction industry, so a number of professional advisers and building firms saw the opportunity to help with the formation of these bodies and at the same time create work for their office and construction workers. There were also a number of enlightened people who took the opportunity to promote the advancement of some worthy objectives, with or sometimes without access to public funds.

I have been privileged to serve on a number of housing association boards catering for various kinds of need and I am well aware of the importance of containing a wide variety of tenures and providing for different types of tenants. However, I also believe that substantial resources have been provided from the public Exchequer and it seems important that the Government should ensure that their proposals regarding the right to buy should be fair and even-handed. I believe that this is my hon. Friend's wish.

I notice that on 28 July last year in reply to the hon. Member for Newham, North-West (Mr. Lewis), who asked about this very point, my hon. Friend the Minister for Housing and Construction replied:
"Under the Housing Act 1980 tenants of non-charitable housing associations which have received Government funds enjoy the right to buy their homes on the same terms, and subject to the same exclusions, as local authority tenants. Charitable housing associations were also empowered by the Act to sell to tenants if they wished to do so, and to offer discounts off market value up to the level available under the right to buy. No distincition is made in the Act between those housing association tenants who were originally nominated to housing association dwellings by local authorities and those who were not"— [Official Report, 28 July 1981; Vol. 9, c. 442.]
However, with the exception of the 40,000 co-ownership properties, of which I understand nearly 30,000 have now been sold to their occupiers, there are over 400,000 houses owned by housing associations of one form or another. Of these, only 120,000 are owned by associations that are not controlled by charitable housing associations. A further 40,000 of these are not eligible for the right to buy as they are excluded, being for specialist occupation such as by the disabled or the elderly.

Although charitable housing associations have been given consent to sell under the Housing Act 1980 buy provisions, very few appear so far to have cooperated. I understand that up to the end of last month only 4,522 notices had been received, being about 5 per cent. of those available, ignoring the charitable associations. It seems, therefore, that there is considerable room for improvement. I have constituents who are particularly anxious to take advantage of these provisions. It seems that the funds that are raised for this purpose should be applied in the same way as those of local authorities where the same purpose applies. The constituents I have in mind are Mr. and Mrs. Reed, tenants of the East London Housing Association. They indicated that they wished to acquire their premises at 135 Thorold Road some while ago and made strong representations to the housing association for this purpose. However, their representations fell on stony ground.

I understand that they have spent no less than £2,000 on improving the premises they occupy through the installation of double glazing and various other amenities that they wished to provide for their old age. They hoped that they would be able to take advantage of the Government's determination to ensure that council tenants should have every opportunity of becoming owners of their accommodation. They felt that they would not be acting foolishly in expecting the same provisions to be extended in their case. However, it appears that, in their circumstances, because the East London Housing Association is formed as a charitable association, it is not necessarily a charity, but it has a charitable association form of incorporation and is therefore exempted from the provisions.

It seems to me that, if this is the case, it is wrong that a large section of the community, probably approaching 200,000 occupiers, should be specifically prevented from taking advantage of the Government's determination to give people every right and opportunity to own the houses that they occupy. This is particularly the case in the matter to which I have drawn attention. I ask my hon. Friend to request all housing associations to keep returns showing whether their tenants have made specific applications to them for the right to buy.

I also suggest that it should be necessary that a return be submitted to my right hon. Friend's Department at least annually giving this information. Substantial numbers of occupiers would welcome the opportunity to express their wishes as it would then give my hon. Friend some indication of how many people are involved and what are the circumstances of their commitment. I also ask my hon. Friend if he feels that there is sufficient demand to examine a requirement for housing associations to opt out of the right-to-buy provisions. That measure was used in the Leasehold Reform Act 1967. All occupiers of premises on long leases were given the right to buy their freehold. In certain circumstances, freeholders rightly drew attention to the fact that the estates that were laid out formed part of special schemes and that those special schemes would be destroyed if the long leaseholders were enabled to buy their freeholds. They pointed out that that would give the occupants special extra privileges and that they would then have the opportunity to make alterations to the premises that they would not have been able to make as leaseholders, and this would destroy the general make-up of a carefully designed and well laid out estate.

I remember that many occupiers supported the freeholders in that regard. For example, those living in the Hampstead Garden suburb were a case in point. Many occupiers greatly appreciated the fact that there was a freeholder who took greater care and had greater control over the way in which the accommodation was occupied than would have been possible on an estate of freehold houses. It was then necessary for all those freeholders to show why their schemes should be excluded from the provisions of the Leasehold Reform Act 1967. It now seems to me appropriate that a similar exemption should be applied for by those housing associations that feel that they should have a special exemption from the right-to-buy provision.

Even in the case of elderly people, there are now some excellent schemes whereby it is possible for the elderly person to acquire a property on a specific understanding that it must be occupied by an elderly person and cannot, therefore, be sold on the open market for general needs housing. Alternatively, the property must be resold to the housing association at the current value when the elderly person either dies or wishes to move. In this way some significant control is maintained.

It seems, therefore, that where accommodation is occupied by elderly persons there is, or should be, every opportunity for them to own the premises that they occupy. The need to keep those properties entirely within the ownership of the housing association seems to be much less important than it used to be. Leaving aside the other important sector—the disabled—it would now seem to be possible to give everyone a greater opportunity to participate in the right-to-buy provisions. I am convinced that a substantial number of people would greatly appreciate the opportunity to acquire their housing association premises. It is quite wrong that they should be deprived of that right. Does my hon. Friend have any proposals? If so, what can he do to help put the matter right?

10.15 pm

My hon. Friend the Member for Ilford, South (Mr. Thorne) has made a perceptive and well-researched speech, as one would expect from him. As someone who has also played a role in housing associations I appreciate what he said about the importance of the movement generally in tackling the country's housing problems.

My hon. Friend raised the important subject of sales by housing associations under the Housing Act 1980. The right that the 1980 Act gave to tenants of public sector housing to buy the homes in which they live is one of the key elements of the Government's housing policy. Most of the attention given to the right to buy by the House and by the public has been directed towards local authority housing. However, as my hon. Friend has pointed out, tenants of some housing associations also have the right to buy.

As my hon. Friend said, there are approximately 400,000 homes rented from housing associations in England and Wales, and we estimate that about 80,000 housing association tenants have the right to buy their homes. These numbers are, of course, small in comparison with the number of local authority dwellings that are subject to the right to buy. But this should not be allowed to overshadow the important contribution which sales by housing associations can make to the growth of home ownership in our society.

The Government are anxious to ensure that all tenants wanting to exercise their right to buy can do so without impediment. We also understand the wishes of those housing association tenants who for one reason or another do not have the statutory right to buy but who would dearly like to be able to own a home of their own. My Department has received many letters from people who do not at present have the right to buy. I refer my hon. Friend to what my right hon. Friend the Prime Minister said on 11 February. She said that she was
"well aware that our pledge at the general election covered those living in leasehold properties belonging to local authorities who wish to buy their homes, but where the local authority does not possess the freehold. Our last legislation did not cover that case. It should be covered. It is our intention to cover it. We have a high priority to do so." [Official Report, 11 February 1982; Vol. 17, c. 1111.]
That undertaking on leaseholds would apply to housing association tenants as well as local authority tenants.

My hon. Friend has drawn attention to the very large numbers of tenants of charitable housing associations who do not enjoy the right to buy, and has urged that these people should also be given that statutory right. I have much sympathy with that view. He referred to correspondence that he has had with my Department concerning one of his constituents.

However, this is by no means a straightforward issue and I think that it may help my hon. Friend if I explain briefly how the right to buy currently applies to housing associations and why it was decided to exclude tenants of charitable institutions from the right to buy provisions of the 1980 Act.

In order to receive public funds, housing associations must be registered with the Housing Corporation. Tenants of all registered associations are secure tenants under the 1980 Act and have the right to buy, subject to certain conditions, unless they are tenants of certain associations excluded by the Act. Housing trusts and housing associations that are charities are much the most important exclusion. Indeed over two-thirds of all housing associations are charities or have charitable rules.

Many of the oldest housing associations started work in the nineteenth century with charitable aims, as my hon.

Friend reminded the House earlier—to provide decent housing for the poor and aged. Many of the newer associations were also set up for charitable purposes—to help those in inner city areas who could not find or afford decent housing, or to provide housing specifically for the elderly or the infirm. As charities these associations have a special position in our legal system, and are strictly governed by their rules which, together with the charity laws, control what they can and cannot do. Much of their housing stock was provided with charitable funds.

When the Bill that became the Housing Act 1980 was drafted and put before Parliament the Government recognised that there was a clear difference between housing provided from charitable funds and housing provided by local authorities and non-charitable housing associations, almost all of which has been built or acquired entirely with public funds. For that reason, we excluded charitable housing associations from the right to buy.

However, we certainly acknowledge that in recent years a great many dwellings have been provided by charitable housing associations entirely or substantially with public funds. It can certainly be argued that the tenants of such dwellings should enjoy the same rights as tenants of other publicly financed housing. No doubt many such tenants would like to buy their homes if given the opportunity at the advantageous terms available under the 1980 Act. My hon. Friend made an eloquent case for an extension of the right to buy, and I can assure him that we will carefully note the points that he has made.

Meanwhile, the 1980 Act gave charitable housing associations the power to sell homes voluntarily, subject to the conditions of their own trusts. I hope that, where tenants wish to buy, charitable associations will be prepared to consider using their discretionary power to sell.

In some of the correspondence we have had, my hon. Friend was concerned that tenants of non-charitable housing associations who already enjoy the right to buy under the 1980 Act may be experiencing difficulty in buying their homes. Other hon. Members have contacted the Department on this subject. It is true that, following the passing of the Act, sales by housing associations were rather slow to gather momentum. However, I do not believe that associations generally are adopting the kind of doctrinal opposition that we have seen from certain local authorities.

We have received some complaints from tenants about excessive delays in completing sales but very few compared with the number of tenants who have bought, or are buying, their homes. All these complaints will be taken up by my Department with the housing association concerned.

My officials and those of the Housing Corporation have also spent a good deal of time reassuring associations and giving them specific advice. The evidence of my correspondence is that sales are now going ahead, and I hope that no tenants who have claimed the right to buy will have to wait long to complete their purchases.

If we discover that any associations are delaying sales for no good reason, we shall take an extremely serious view of the matter. The 1980 Act gives my right hon. Friend the Secretary of State the power to intervene where tenants have difficulty in exercising the right to buy effectively and expeditiously. As my hon. Friend knows, we have already used that power in relation to sales by a local authority.

My hon. Friend referred to statistics about the completion of right-to-buy sales by housing associations. Although we have asked the Housing Corporation to collect this information from associations on a regular basis, the first return will not be available until next month. In the meantime, I can confirm the figure that my hon. Friend gave the House. By the end of March, the total number of section 10 notices served by housing associations in England and Wales was 4,522, and the number of completions with Housing Corporation mortgages was 166. That latter figure is certainly far less than the total number of completions, as the majority of purchases will have obtained mortgages from building societies or banks.

I hope that that will assure my hon. Friend that we are very much aware of the concern of his constituents and of all housing association tenants who are seeking to buy their homes.

My hon. Friend suggested that the Secretary of State should direct either the Housing Corporation or the charitable housing associations to keep a record of tenants who wish to buy their homes but who do not have the right to do so at present because their landlords are charities. I must tell him that my right hon. Friend the Secretary of State has no powers to give such directions to associations.

The Housing Corporation would not necessarily know of tenants wishing to buy their homes but unable to do so, but my Department has received representations from a number of people in this position, and we are considering their views together with the views that my hon. Friend has expressed tonight.

As to the need to compile information about how many housing association tenants wish to become owner-occupiers, I imagine that those figures would be broadly comparable with the figures for local authority tenants, where the wish to own their homes has been tested several times in surveys and has been found to be at a high level.

I am grateful to my hon. Friend for bringing these issues to the attention of the House. I assure him and the House that the Government will take every possible step to help everyone whose desire it is to own their own home.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past Ten o'clock.