Newly-built housing could be exempt for a set period of time and eligibility periods extended as part of Rayner’s package of reforms to help councils protect their housing stock
The government is considering exempting newly-built council housing from the Right to Buy for a set period after completion, in one of several proposed reforms of the policy designed to help local authorities protect their stock.
The Ministry of Housing, Communities and Local Government (MHCLG) has today published a consultation paper outlining several ways the policy could be reformed. This follows Labour’s election manifesto pledge to increase “protections on newly-built social housing”.
In today’s paper, MHCLG is calling for views on whether newly-built social housing should be exempt. Currently council tenants can buy a home with a discount as soon as three years after they move into a property. The MHCLG paper says this disincentives councils from investing in new housing.
MHCLG said stipulating any home built after a given date is exempt would be “simple to understand” and give councils greater confidence to build. However, it said this would remove the ability of a tenant from ever being to exercise their statutory Right to Buy, while the homes would not rationally be defined as “new” after a given period.
>> Also read: Was Angela Rayner right to buy?
Instead, it suggests newly-built social housing could be excluded for a set period of time, such as “10 or 20 years”. The paper seeks feedback on what this time period should be.
At-a-glance: Right to Buy consultation
The government is proposing an overhaul of the Right to Buy and is seeking feedback on proposals. The key measures include:
- Increasing the three-year minimum tenancy period for tenants to be eligible to apply under the scheme.
- Reviewing the current exemptions to the scheme and whether newly built social homes should be exempt for a given period of time (such as 10 or 20 years) to encourage council investment in new homes. MHCLG is also asking whether homes that have been improved through council investment to a high standard should also be exempt.
- Seeking views on the replacement of homes with an emphasis on more social rent homes and if there should be a target to replace all future sales on a one-for-one basis.
- Increasing the period in which councils have the right to ask for repayment of all or part of the discount received when a property is sold from five to ten years.
From tomorrow:
- Discounts will be reduced to pre-2012 levels
- The cost floor protection period, under which discounts can be limited to avoid the price falling below what has been spent on building, repairing and maintaining properties, will be increased from 15 to 30 years
The paper asks for views on how council investment in retrofitting or improving homes to a high standard can be protected, and whether there should be an exemption for these homes.
The government is also considering increasing the minimum amount of time a tenant has to have lived in a property in order to qualify for the Right to Buy from its current level of three years.
It said: “In order to deliver a fairer scheme that represents better value for money, the government thinks that the length of time someone needs to have been a public sector tenant should increase; a tenant occupying a property for three years is extremely unlikely to have paid rent that equates to the available discount.”
It asks for feedback on whether this period should be extended to five years, 10 years or more than 10 years.
The consultation paper also seeks views on whether replacement homes should be for social rent, whether they should be the same size and in the same area and whether there should be a target to replace all future Right to Buy sales on a one-for-one basis.
MHCLG is also asking whether the time period in which a council has the right to ask for repayment of discount upon sale of a property by a Right to Buy tenant should be increased from five to 10 years.
The consultation is proposing changes to the minimum and maximum discounts as a percentage of the property value and applying the same rules to both houses and flats. It is also suggesting simplifying the receipts system to make it easier for councils to use this money to buy and build more social homes.
The government has already taken steps to change some aspects of the policy, with some changes coming into effect tomorrow.
This includes Right to Buy discounts returning to the levels they were at before the David Cameron-led coalition government increased them in 2012. Officials have estimated this will lead to Right to Buy sales falling to 1,700 a year, down from the 6,000 registered in 2023/24 and the average of 11,000 a year seen between 2014 and 2018.
The government from tomorrow also increases the cost floor protection period from 15 to 30 years under which discounts can be limited to avoid the price falling below what has been spent on building, repairing and maintaining properties.
Angela Rayner, deputy prime minister and housing secretary, said: “Too many social homes have been sold off before they can be replaced, which has directly contributed to the worst housing crisis in living memory.
“We cannot fix the crisis without addressing this issue – it’s like trying to fill a bath when the plug’s not in. A fairer Right to Buy will help councils protect and increase their housing stock, while also keeping the pathway to home ownership there for those who otherwise might not have the opportunity to get on the housing ladder.”
The consultation closes on 15 January.
Sector reaction
Adam Hug, housing spokesperson for the Local Government Association (LGA) said: “The LGA has long-called for reform to Right to Buy as the system in its current format does not work for local authorities and those most in need of social housing.
“Steps taken by government already this year to amend the scheme are positive, and the measures set out today in this consultation will help further in supporting the replacement of sold homes and to stem the continued loss of existing stock.
“Councils are keen to deepen our collaboration with the government to increase affordable housing and help people on council housing waiting lists and record numbers stuck in temporary accommodation.”
Tracy Harrison, chief executive at Northern Housing Consortium said: “With more than 420,000 households on social housing waiting lists in the North, more social homes are desperately needed, and we must protect those that we already have. We’ve been consistently calling for reform to Right to Buy , so these changes are very welcome. They will help stem the loss of social homes and support local authorities to replace those that are sold.
“We particularly welcome the proposals to exempt newly build homes from the Right to Buy as this will help councils build with confidence. The confirmation that Right-to-Buy will not be extended to housing associations is also long overdue.”
Gavin Smart, chief executive of the Chartered Institute of Housing (CIH) said: “The CIH has been very concerned that there are now some 220,000 fewer homes available at social rents than there were a decade ago. The reforms announced today will help to turn this around. We have already welcomed the decision that councils can reinvest all their receipts from sales, and today’s proposal for further measures to protect newly built homes from the Right to Buy will also help. The outcome from the various measures the government is taking should mean that the Right to Buy is a much more sustainable scheme than it has been since 2012.”
Kate Henderson, chief executive of the National Housing Federation (NHF) said: “At a time when 4.2 million people are in need of social housing in England, we strongly support the government’s aim to protect the country’s social housing and welcome confirmation that Right to Buy will not be extended to housing associations.
“Social housing is the only housing that is affordable to families on low incomes. Last year there were only 700 net new social homes due to sales through Right to Buy, whilst over 150,000 homeless children spent the night in temporary accommodation. We support people’s ambitions to own their own home and agree that routes to affordable ownership are important, but they must not come at the expense of our social housing which is a vital and increasingly scarce resource.
“Alongside these reforms, we look forward to working with the government on the long-term housing strategy that is needed to deliver it’s housing ambitions and build a generation of new social homes.”
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