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Cllr John Moss, a Chartered Surveyor, a councillor in the London Borough of Waltham Forest and former parliamentary candidate, is disappointed the right to buy has nt been extended to Housing Association tenants
One announcement I had hoped to hear at last week’s Conservative party conference, but which sadly did not come, was the extension of the Right to Buy to Housing Association tenants as well as Council tenants.
There are around four million “social” homes in England and Wales. Approximately half are owned by Councils where the tenants do qualify for the Right to Buy and around 750,000 Council tenants have seen their homes transferred to Housing Associations who also retain this right. The Government has done a good thing by increasing the maximum discount to market value that these tenants can secure, but there are still well over 1.2 million households to whom this choice is denied, simply because when they needed a social home, their only choice was to go to a Housing Association. That’s unfair and we should end this discrimination.
One of the arguments against this has always been that because Housing Associations use debt finance, sometimes coupled with grant, to build their homes. Extending Right to Buy to them might give them problems, because they would lose the income used to service those loans and they may not be allowed to simply repay the capital because of the terms of the loan deals.
But most Housing Associations today are actually big property investors, they run portfolios often exceeding 10,000 units, they have corporate financing rather than smaller, project specific debts and they offer many different ways to occupy their homes, not just social rent. So swapping income for capital and reinvesting that capital to build new homes would actually be quite an easy fit for most.
It is true that some smaller Housing Association have not traditionally operated this way and remain niche players, but that should not be used as an excuse to restrict one household occupying a social home from access to Right to Buy, just because they happen to have a different landlord. And the potential benefits are huge.
I spoke to Mike Griffiths, Chief Executive of the Home Group at the party conference and he agreed that this could be a source of new capital to invest in new homes and that many of his equivalents in other Housing Associations were of a similar mind. It would also mean that a family which could afford to buy, so almost certainly working and earning a reasonable wage, would remain in their home, part of their community and, from their local spending, contributing to the local economy.
If the average value of a Housing Association property is £150,000 and just 10% of them were sold over the next ten years – which compares favourably with the 20%+ of sales of Council homes which was achieved over the first ten years of the Right to Buy policy in the 1980s – this would generate £12 billion in cash for reinvestment in to new homes. As many Housing Associations have existing planning consents for developments which have been somewhat stuck because of the market, using this cash to fund those schemes, rather than relying on market sales would mean that almost all the homes sold could be replaced.
When money is tight, we have to be innovative and radical. Extending Right to Buy to Housing Association tenants is both – and it is also fair, to both the tenants who to date have been denied this and to those on waiting lists who desperately need more new homes to be built.