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The Communities & Local Government (CLG) Committee expresses concerns over funding of Right to Buy in its report.

• Report: Housing associations and the Right to Buy
• Report: Housing associations and the Right to Buy (PDF 704 KB)
• Inquiry: Housing associations and the Right to Buy
• Communities and Local Government Committee

The Communities & Local Government Committee comes to the following view:

"The Government proposes to fund the Right to Buy discounts for housing association tenants with the proceeds from the sale of high value council homes. However we believe that public policy should usually be funded by central Government, rather than through a levy on local authorities."

The Committee also finds the robustness of the funding model for the RTB discounts is extremely questionable, calling on the Government to set out the fully costed evidence for the proposals.

Chair's comments

Clive Betts MP, Chair of the Communities and Local Government Committee, said:

"The fundamental success of this policy will depends not just on whether more tenants come to own their home but on whether more homes are built. As a Committee, we are concerned that there are a number of unresolved issues with the Government’s policy which could have a detrimental effect on the provision of accessible and affordable housing, particularly affordable rented property.

The Governments needs to set out in more detail on how it will meet its target of at least one-for-one replacement of the sold homes, particularly given issues such as  the availability of land, the capacity of the building industry and the uncertainty of income from council home sales."

Findings 

The Committee also calls on the Government to protect rural communities by maintaining and protecting the provision of affordable housing in rural areas. The terms of the housing associations’ voluntary agreement with the Government allow for portable discounts to be offered in place of certain properties. The Committee considers that while the portable discount might mitigate the impact of extending the RTB to rural properties, it still remains unclear how it will operate.

The Committee is concerned that the Government’s imposition of a 1% rent cut for four years will lead to a significant reduction in housing associations’ income. This rent reduction threatens to damage the ability of housing associations to build new homes and could also have a negative impact on pastoral services, such as helping people get back into work, currently on offer to tenants.

The Committee finds that large numbers of homes sold through the statutory right to buy for council tenants have quickly become private sector rental properties.  The Committee believes the potential for selling social housing assets at a discount, only for them to become both more expensive and possibly lower quality housing in the private rented sector, is a significant concern. The Committee recommends measures to restrict homes sold through the right to buy ending up in the private rented sector need to be explored.

Proposals for the future

The Committee calls on the Government, before the 2016 Autumn Statement, to provide some certainty over rent levels post 2020 which would help long-term business planning and increase investor confidence. In the long term, the Committee recommends housing associations be given the freedom to set their own rents. The Government is committed to deregulating the housing association sector: freedom for housing associations to set the rents for their tenants should be the next step, since housing associations understand their tenants and the local market and are best placed to set fair rent levels.

The Committee considered the proposed ‘pay to stay’ policy, where differential rents would be charged according to tenant income, and welcomes the Government’s announcement that this will be voluntary for housing associations. The Committee believes the suggested thresholds should be reviewed and support housing associations being given local discretion, should they choose to adopt the policy.

The Committee recognise the scale of the Government’s policies regarding Starter Homes and the new legal duty on councils to ensure provision of 200,000 new Starter Homes across all reasonably sized sites. However, Starter Homes should not be built at the expense of other forms of tenure if there is a local need for affordable rented accommodation. It is important that homes for affordable rent are built where the need exists, particularly as Starter Homes can now count towards satisfying the affordable housing allocation in section 106 agreements.

Further information

• About Parliament: Select committees
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