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Right to Buy: Housing Associations

Volume 765: debated on Monday 12 October 2015

Statement

My Lords, with the leave of the House, I will repeat as a Statement an Answer given earlier by my honourable friend the Minister for Housing and Planning. The Statement is as follows.

“As stated in our manifesto, this Government want to give housing association tenants the same home ownership opportunities as council tenants. Since the introduction of right to buy, nearly 2 million households have been helped to realise their aspirations to own their own homes—46,000 sales since April 2010, with nearly 40,000 of those under the reinvigorated scheme introduced in 2012 by the last Government.

This Government want to help families achieve their dream of home ownership, but about 1.3 million tenants of housing associations are not able to benefit from the discounts that the last Government introduced. That is why we want to give housing association tenants the same home ownership opportunities as council tenants.

At present, we have a situation where some housing association tenants have the preserved right to buy at full discount levels, some have the right to acquire at lower discount levels, and others have no rights at all. That cannot be right, and the Government want to end this inequity for tenants and extend the higher discount to housing associations.

On 7 October, the Prime Minister announced that a deal had been agreed with the National Housing Federation and its members which would give tenants of housing associations the opportunity to buy their home with an equivalent discount to the right to buy. This will deliver the manifesto commitment to extend the benefits of right to buy to 1.3 million tenants.

In summary, the deal will enable the following: 1.3 million families will be given the opportunity to purchase a home at right-to-buy-level discounts, subject to the overall availability of funding for the scheme and the eligibility requirements. The presumption is that housing associations will sell the tenant the property in which they live.

The Government will compensate the housing association for the discount offered to the tenant, and housing associations will retain the sales receipt to enable them to reinvest in the delivery of new homes. Housing associations will use the sales proceeds to deliver new supply and will have the flexibility, but not the obligation, to replace rented homes with other tenures such as shared ownership. The Government will continue to work with the National Housing Federation and its members to develop new and innovative products, so that every tenant can buy a stake in their home.

As part of the agreement, the Government will also implement deregulatory measures which will support housing associations in their objectives to help support tenants into home ownership and deliver the additional supply of new homes. Boosting the number of sales to tenants will generate an increase in receipts for housing associations, enabling them to reinvest in the delivery of new homes. Housing associations will be able to use sales proceeds to deliver new supply and will have flexibility to replace rented homes with other tenures such as shared ownership.

Housing associations have a strong record in delivering new homes, as evidenced by the way we have exceeded our affordable homes target, delivering nearly 186,000, which is 16,000 more than originally planned, between 2011 and 2015.

We want more people to be able to own a home of their own, and extending the right to buy is a key part of this, giving tenants aspiration and something to strive for. Extending the right to buy will enable tenants of housing associations to have the opportunity for the first time to purchase their home at the same discount level currently enjoyed by tenants of councils.

We will now be working closely with the sector on the implementation of the deal, and I will update honourable Members in due course on the next stage of the implementation”.

My Lords, I thank the noble Baroness for repeating the Answer to the Urgent Question from the other place. I declare an interest as an elected member of Lewisham Borough Council. The extension of the right to buy to housing associations funded by the forced sale of council homes will mean fewer affordable homes, and we will oppose that. I am sure the noble Baroness will have seen the figures from Shelter estimating that up to 113,000 council homes could be sold to pay for this policy. Can she tell the House more about the guarantee of like-for-like replacement that she referred to? Is that both for housing association and council homes?

My Lords, councils should effectively and efficiently use their resources. Where there is an increased need for housing across the country, it makes no sense for a local authority to keep high-value, vacant council houses when it could sell them to fund the building of new homes that will reflect its local housing need and increase overall housing supply. We want to work with both local authorities and local associations to ensure this one-for-one additional housing.

My Lords, I thank the Minister for her Answer. I am still unclear whether there is to be a requirement on local authorities to sell off their best housing to help pay for this policy. Will sheltered housing, which is protected under the right to buy for local authority sales, be treated similarly in the context of housing association right to buy? What is the Government’s target for net new homes for rent as a consequence of this policy?

My Lords, as I just said, where there is a need for housing across the country, it makes no sense at all for local authorities to keep hold of their high-value, vacant council houses. Selling such properties will mean more money to fund the building of new homes. That will better meet their local needs and some of the money will go to support housing association tenants to buy their own property. This is part of our wider effort to help anyone who works hard and wants to get on the property ladder to achieve their dream. We are legislating to require local housing authorities, as the noble Lord said, to pay the Secretary of State a sum in line with the anticipated receipt from the sale of high-value council housing, and councils will be able to retain some of the sale funds to support new housebuilding locally to increase the overall housing numbers in their area. We will announce more detail in due course, obviously through the housing Bill. In terms of our aspiration on affordable housing, our aim is to deliver—

At what stage will we know details about such things as a sinking fund for those buying these housing association properties? That will definitely be an important feature as this has proved such a bugbear for those who bought their council flats and now find that they cannot afford the repairs.

My Lords, does the Minister agree that there is a shortage of special housing for disabled people? Many housing associations provide this. Will these houses be protected?

My Lords, the Government will expect housing associations to abide by their obligations in terms of homes for disabled people, for homeless people and for sufferers of domestic violence.

My Lords, the Government are very wise to back off from giving a statutory right to buy to housing association tenants. I congratulate the Secretary of State for coming to this compromise with the National Housing Federation. However, 55% of housing associations voted in favour of this. The rest have yet to make up their minds or voted against it. What will happen to the housing associations that do not voluntarily sell to their existing tenants?

My Lords, as I understand it, 94% of housing associations signed up to this but the federation confirmed that the offer—

I think that 94% of the properties owned by housing associations are covered but only 55% of the housing associations themselves, many of them small bodies such as independent charities, have signed up to the deal.

My Lords, I stand corrected by the noble Lord, who is far more expert than I am. However, the federation has confirmed that the offer is sector-wide and that it will encompass all housing association tenants. If necessary, the Homes and Communities Agency will be given additional powers to assess housing associations to a new homeownership standard. If necessary, we will take further steps to ensure that the right to buy is available to them, in line with our manifesto commitment.

My Lords, housing associations have come from the charitable sector to build social housing for those unable either to rent or to buy. As a result, this policy is morally wrong, it distorts the charitable objectives of housing associations and it is financially illiterate. Will the Minister confirm that as a result of this policy, housing associations will lose a social home to rent on the waiting list, and local authorities will lose a second home available to rent for people on their waiting list, to fund, thirdly, a gift of up to £100,000 to a sitting tenant, which, if the statistics on RTB for council housing prevail, within five years will have been recycled into buy to let, into the private rented sector, at double the rent and double or treble the housing benefit bill, which the taxpayer will pick up? Therefore there will be two sales, a huge discount, funded in turn by going into buy to let at taxpayers’ expense, to do what? It will not add a single house to the stock but merely change the label over the door that says “tenure”.

My Lords, I confirm to the noble Baroness that houses that have a specific charitable purpose will retain it. I also confirm that the Government make no bones about the fact that they support people’s aspiration to own their own home. Contrary to what the noble Baroness thinks, the building of extra homes on at least a one-for-one basis by housing associations will add significantly to the housing stock in this country.

One in nine of the houses sold under RTB has been replaced. Why does the Minister think that the housing associations sales will be any different?

My Lords, it is indeed very good news that a majority of housing associations are in favour of this excellent opportunity afforded to them. Can my noble friend say when next there will be an opportunity to have an estimate by the Government of what individual tenants, many of whom wish to have this opportunity, are thinking, and when that will be published?

My noble friend makes a very important point, because at the heart of this policy are the tenants and their aspiration to own their own home. I will segue into the previous point made by the noble Baroness, Lady Hollis, about right-to-buy properties not keeping pace; in fact, that programme has literally just started.

My Lords, has the ONS confirmed that it will re-examine the classification of housing associations in the national accounts? That followed a warning from the Office for Budget Responsibility that the extended right to buy and the planned cut in housing association rents could trigger that review. Of course, reclassification would mean that income and expenditure would be part of the public finances and, most importantly, it would add something like £63 billion to the Government’s borrowing requirement. Is it not the case, and is it not part of the government rationale for the voluntary deal, that if right to buy is volunteered, not imposed, that removes one of the key reasons for the ONS review?

My Lords, whatever the ONS chooses to do in terms of classification, we are absolutely determined to deliver 275,000 affordable homes by the end of this Parliament. Noble Lords should not forget that the 2015-18 programme is still in its initial year, as I said to the noble Baroness, Lady Hollis. We saw housing associations—the providers—maximise outputs at the end of the 2011-15 programme, which has caused an inevitable lag in starts in the current programme.