Government to extend Right to Buy to 2.5m tenants of housing associations amid concerns over potential loss of social housing and legal barriers

The Prime Minister, Boris Johnson, has today confirmed that the Right to Buy scheme will be extended to two and a half million tenants who rent their homes from housing associations.

However, there have been warnings that the move could lead to a loss of social housing and suggestions that there are significant legal obstacles in the way.

The Government said it would work closely with the housing association sector on the design of the scheme. It added that the Prime Minister would commit to the building of replacement social homes for each one sold.

Boris Johnson said: “Just as no generation should be locked out of home ownership because of when they were born, so nobody should be barred from that same dream simply because of where they live now.

Article continues below...

“For four decades it has been possible for council home tenants to use a discount to buy the property they live in. Over that time almost two million people have been helped into home ownership.

“They have switched identities and psychology, from being dependent on the state for every repair – from damp-proofing to a new front door – to being in charge of their own family home, able to make improvements and add value as they please.”

The Government has also announced that it will launch an independent review of access to mortgage finance for first-time buyers, “with the aim of making it easier for this group by widening access to low-cost, low-deposit finance such as 95% mortgages”.

The Prime Minister added that welfare rules would be changed so that the 1.5 million people who are in work but also on housing benefit will be given the choice to use their benefit towards a mortgage, rather than automatically going directly to private landlords and housing associations.

Levelling Up Secretary Michael Gove said: “Today we are extending the opportunity of homeownership to millions more hardworking people across the country.

“By extending Right to Buy and bringing forward the most comprehensive review of the mortgage market in decades, we are backing first-time buyers, breaking down barriers to homeownership and delivering on the people’s priorities.

“At the same time, we will continue to deliver much-needed new, good quality social homes by replacing each and every property sold.”

The Government will also change the rules to incentivise those who are claiming Universal Credit to save for a deposit. It noted that, currently, welfare rules taper the amount of Universal Credit received when the claimant’s savings exceed £6,000, and it stops entirely when savings exceed £16,000.

“We will commit to exempting Lifetime ISA savings from these rules – meaning hard-working people can save a little each month specifically for a deposit without impacting their Universal Credit payments, until they have enough for a deposit for a first home.”

Responding to the announcement, Kate Henderson, Chief Executive of the National Housing Federation, said: “Housing associations’ priority is to provide homes for the 4.2 million people currently in need of social housing in England - this includes 1 in every 5 children, many of whom are living in overcrowded conditions or homeless in B&Bs and other temporary accommodation.

“Right to Buy pilots have shown that there is not enough money from sales to build new social homes to replace those sold, meaning a net loss of social housing.”

Henderson added: “We support measures to help people buy their own home and housing associations already build thousands of homes for shared ownership every year, helping people take their first steps onto the housing ladder. However, we are deeply concerned about the long term impact of Right to Buy and any loss of social housing will make the challenge of providing homes for those in need even harder.

“We will, of course, engage with the government and are keen to understand the detail about the proposed extension of Right to Buy to housing association homes.”

Cllr David Renard, housing spokesperson for the Local Government Association, meanwhile said: “Owning your own home is an important step for many people, and an extension of the Right to Buy scheme to housing associations tenants could enable many more to get on the housing ladder.

“However, measures that support homeownership should not lead to any reduction in the overall number of affordable social rented homes. Any houses sold must be replaced quickly, in the same local authority area and on a like for like basis. Equally, the cost of discounts must not be funded from the sale of council housing stock, nor be met from existing government funding commitments for delivery of additional affordable homes.”

Cllr Renard also suggested that the Right to Buy scheme for council tenants also needed urgent reform and councils needed to be able to keep 100% of receipts and set discounts locally.

“The number of new council homes being built is not able to keep pace with those sold under Right to Buy, and the discounts available, along with the funds that have to be returned to Treasury, are leaving councils with less and less resources to catch up,” he said.

“With over 1.1 million households currently on social housing waiting lists, any loss of social rented housing would risk pushing more families into the private rented sector, as well as driving up housing benefit spending and rents and exacerbating our homelessness crisis at a time of an escalating cost of living crisis. We need to be urgently increasing, not reducing the supply of affordable social homes.”

Clive Betts, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said the Prime Minister needed to make clear that if the Government presses ahead with extending the right to buy for those renting housing association properties, “it is vital the money goes back into the system of social housing so that new homes can be made available for low-cost rent and purchase”.

Betts said: “The success of an extended Right to Buy policy will surely depend upon the homes sold being replaced and the housing supply being maintained. I hope the Government will explain how this policy will safeguard the provision of accessible and affordable housing, particularly affordable rented property.”

Calling for more information on the scheme, he added: “Extending Right to Buy will not be a cost-free policy, so further detail on how this is to be funded and how it will provide for the construction costs of new homes is essential. Those who need low-cost homes should not pay the price of this policy. The Government should commit to ensuring current social housing is replaced on a like-for-like basis - a house that is sold should not be replaced by a flat.

“The Government will also need to explain how it will overcome the legal hurdles of forcing housing associations, who are independent bodies, to sell their assets. The Government should also indicate whether they intend to require the agreement of housing associations in implementing this policy.”

(c) HB Editorial Services Ltd 2009-2020