Local authorities have urged the government to be more flexible on how Right to Buy receipts are used. Housing minister Dominic Raab recently pointed out that while the number of homes available for social rent has increased in recent years, some councils have not been building enough Right to Buy replacements to match the pace of their sales. This, he said, means it is “clear that local authorities need to increase their rate of delivery of new homes”.
Councils across the country have therefore responded by arguing that their ability to replace sold-off houses has been hampered by government regulations.
Indeed, the rules state that councils must give a share of their Right to Buy receipts to the Treasury, rather than keep 100 per cent of the money they receive from sales. Furthermore, no more than 30 per cent of the construction costs of each replacement home are to be funded through the use of the Right to Buy receipts.
Speaking to Inside Housing, a spokesperson for Gateshead Council noted that in the last six years, it has sold 627 homes for £25.8 million, but retained just £14.2 million in receipts against a market value of £53 million. The government, meanwhile, has retained £11.6 million, the representative said.
Similarly, Jane Urquhart of Nottingham City Council pointed out that while it costs more than £100,000 to build each new home, the average replacement funding it received for each Right to Buy sale last year was just £13,638 per house.
This, she said, means it should be “no surprise that we can’t replace homes on a one-for-one basis”.
Andy Connelly, assistant city mayor for housing at Leicester City Council, stated that his authority gets to keep an average of just £20,000 per sale.
As a result, he believes that if the government “truly wants to support local authorities to create more affordable housing, the easiest way would be to remove the borrowing cap it places on local authorities”.
A spokesperson for Manchester City Council added that since councils can only use a portion of the Right to Buy receipts to replace homes that are sold off to tenants, they are being “put in a position where it is increasingly difficult to maintain the levels of social housing for residents that need them”.
Local authorities will soon get the chance to formally air their views to the government, as Mr Raab has confirmed it is to consult on offering councils “greater flexibility” regarding the use of Right to Buy receipts.
For further information on any of the points raised in this article please contact Andrew Murray in our Social Housing Team.