My Lords, I have a number of amendments in this group, some of which I have co-signed with the noble Lord, Lord Stoneham of Droxford. I think we were probably both approached by the same organisation. There is one I have tabled which he has not co-signed, but I will not steal his thunder, apart from on the one that is in my name, Amendment 39. If necessary, I will come back to other amendments later, as I do not want to talk over what the noble Lord may have already prepared.
I will start straightaway. In the previous debate, I said that rural people should have the right to buy, disagreeing with some of the proposals in the Bill and some of the arguments made by other noble Lords. Amendment 36 is basically saying that housing associations and local housing authorities should not be allowed to sell properties in rural areas. If somebody cannot buy it, why is it that a housing association should be able to sell it to the private market directly? The reason I say this is that, if we are concerned about the housing stock, and that is the reason to not allow a property to be sold to those already living in it and paying rent on it, then I do not understand why other private providers or private buyers should be able to come in, just because they have the money.
Noble Lords may wonder why a housing association would want to sell in a rural area. My experience is that, as housing associations have got larger and larger, people are starting to come from further away. Principally, they have discovered a need to try to build homes quite some distance away. I referred to this at Second Reading, so I will not labour the point, but I have seen it happen in places such as Aldeburgh and Orford, in Suffolk. What has ended up happening is that homes are being built in Essex or in Cambridgeshire, not in the local area. It does not feel right to me that we can now, through this legislation, ban somebody who has been living in a home from buying it but we are not stopping the provider that owns it from selling it.
My Lords, my name is on Amendments 37, 38 and 44 in this group, all relating to the disposal of social housing to other buyers—which is quite separate from the right to buy for existing tenants, as they are sales to other purchasers. I have a good deal of sympathy with the comments made by the noble Baroness, Lady Coffey.
Amendment 37 is supported by the noble Lord, Lord Stoneham of Droxford, and would require notification of the proposed sale, by a housing association selling social housing, to the regulator of social housing—as well as to the local authority, as is already in the Bill. Amendment 38 would require the notification to be submitted not four weeks in advance of a disposal, as the Bill specifies, but eight weeks in most areas and 12 weeks in a designated rural area, which I will come back to. I support Amendment 41 in the name of the noble Lord, Lord Stoneham, which he will explain in a moment. Finally, Amendment 44 in my name relates to adaptations made to properties that are going to be sold.
Disposals—sales to any buyer—of social housing have become a bone of contention in a number of places. They mean a loss of accommodation at social rents at a time when there is such a desperate shortage of affordable accommodation. Selling the family silver—even if it needs a good polish—is a short-term solution to the problem of social providers needing to balance the books. Some existing stock is in poor condition, requiring expensive repairs, while some is in places that are at an inconvenient distance from the organisation’s management and maintenance services. Sometimes the social landlord is simply taking the opportunity to sell valuable assets to fund development or major repairs elsewhere.
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The final amendment in this group, Amendment 44, would require the housing association planning to sell to identify whether the home is accessible, either because of its original design or because it has been adapted for people with disabilities or for people with mobility difficulties of the kind that face any family over a lifetime. This knowledge will influence whether a council will decide the property should be retained in the social sector and it is worth funding that retention, either because the property is now equipped exclusively for people with disabilities or people using a wheelchair, or simply because it has been adapted along the way, such as if a DFG—a disabled facilities grant—has been granted in the past to the property and it is more suitable for people with a disability than anybody else. Those properties will be especially treasured and the least likely to be sold.
In all these ways, one is taking the Government’s four-week notification period as the most modest possible way of trying to ensure that more social housing is retained for the purposes for which it was grant-aided in the first place, extending that timescale and including within it the notification to the social housing regulator, as well as ensuring that any properties that have been adapted and improved for people with disabilities are the most likely to be retained.
My Lords, I am most grateful to the Local Councils Network for its help with the amendments in this group in which I am involved. I am also grateful to the noble Baroness, Lady Coffey, for her support for a number of them. I am pleased to support the amendments put forward by the noble Lord, Lord Best.
Basically, the thinking behind all these amendments is that with social housing units that are sold off and disposed of, we are always in danger of losing a valuable social asset. So it is important that whenever a social housing unit is coming up for sale, everything is done to make sure that it is used as a unit for social housing, if it can be, and that we do not lose that in the community. I am not dealing with rural areas in my remarks, but I understand the importance of social housing units disappearing in rural areas.
There is also an issue with housing associations becoming larger and across wider geographical areas; they sometimes lose their connection with the localities because of their spread. Therefore, it is essential that where these sales and disposals take place, they are held to account.
I obviously support the amendment from the noble Lord, Lord Best. The noble Baroness, Lady Coffey, made the same point about extending the one month to two months so that the regulator can be informed and there is a proper period of time for whoever could purchase this social housing unit to look at how they can do it. In Amendment 45, we have put in some requirements for information about the housing unit, as to whether it is decent homes-compliant and on its energy performance. It is about getting all the details of the property together at the same time, so that the process does not become overbureaucratic and prolonged and can instead be quite straightforward.
My Lords, I rise to support Amendment 46, and I start by thanking the noble Lord, Lord Best, and the noble Baroness, Lady Thornhill, for their support.
As I explained at Second Reading and as we have heard already today, the shortage of affordable housing in rural areas has had, and continues to have, long-term social and economic consequences for our rural communities. It has led to school, shop and pub closures and reductions in transport and other services, quite apart from the effect on the viability of local businesses. Traditional social networks have also collapsed, and recent evidence now suggests—as the noble Lord, Lord Best, said—that the lack of supply caused by low levels of new provision of affordable housing to rent is being exacerbated by registered providers disposing of their rural stock. Very often, this rural stock is old and in need of expensive modernising, particularly the need to achieve energy efficiency and modern EPC targets. Furthermore, to make matters worse, they are often high market value rural homes, whose sale receipts could possibly help pay for larger housing projects in more accessible locations that offer economies of scale without the extra costs and complexities of small rural schemes.
The business case for these disposal decisions is irrefutable, but the evidence suggests that these decisions are not recognising the important role that an affordable home plays in a rural community. The evidence shows that there has been a significant increase in rural disposals over the last five years, particularly by the larger registered providers. Once sold, it is difficult to replace these homes in the affected rural community, as opportunities for new affordable developments are scarce, particularly in high-value landscapes or areas affected by ecological constraints or in coastal areas.
My Lords, I will say something about disposals, but as this is the first time I have spoken in the debate, I will make some general comments in support of the Bill.
Social homes are a vital resource for low-income families, and the current system has depleted that stock for decades. I therefore welcome measures in this legislation to protect social housing stock by reforming right to buy. With over 170,000 children currently living in temporary accommodation, it is essential that social homes are protected so that housing associations and councils have the confidence they need to build more social homes at pace. Measures to increase the minimum qualifying period for right to buy to a period of 10 years, reform right to buy discounts and introduce a new 35-year exemption for newly constructed social housing will boost councils’ confidence to build while ensuring that right to buy is more sustainable and better value for taxpayers’ money.
The proposed reforms to right to buy in this legislation have been broadly welcomed by the social housing sector. That is because the current system is not sustainable; it has led to a depletion of social housing stock that is desperately needed, as several others have said. Councils in particular have been unwilling to invest in new social homes that may be quickly sold at a discount.
Similarly, Amendments 38 and 39 risk unnecessarily prolonging effective stock management by increasing the required sale notice period from four to eight weeks, or 12 weeks in a rural area. Such extensions would need to be clearly evidenced. Is four weeks insufficient for housing associations and the local authority to be notified of a disposal and explore opportunities to transfer stock? Disposals are often unviable for social landlords to manage in the long term and bring up to the standards that residents rightly deserve, although I am sure that housing associations will look very closely at the examples that have been provided in this debate to judge their own behaviour in relation to those. The vast majority of disposals are unoccupied, so a well-evidenced case must be made for a requirement to leave homes standing empty for eight to 12 weeks to prolong a sale notice requirement.
I did realise that, which is why I made the point that I just wanted to make some general references because it is the first time that I have spoken. I will continue on to my point. I had wanted also to say something about the impact on rural affordable housing, but I echo so much of what others have said.
I will move on to the point about disposals. Given our acute shortage of social housing, concerns about any social housing being sold by registered providers is understandable. However, a nuanced approach to the issue of disposals and stock management is needed as far as housing associations are concerned.
It is also important to put a limited number of social housing disposals in a wider context. The number of social homes owned by housing associations has consistently grown in recent years, increasing by over 26,000 per year for the last three years, so the sale of housing association homes out of the social rented sector has not resulted in any net loss of social homes.
Some housing associations have a proactive strategy to sell a limited proportion of their homes. It is standard practice as part of wider stock management planning, where the proceeds of sale enable the landlords to invest in building more new, higher-quality homes. One sale often funds the development of more than one home, so a flexible approach to disposals enables housing associations to contribute to the Government’s target of building 1.5 million new homes over the course of this Parliament. For example, one mid-sized housing association has a 3:2 disposals programme, where three social homes are built for every two sold. Importantly, all five of these homes are subsequently part of the overall housing mix.
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That links strongly to my Amendment 48B, on the supplementary list, which says let us not have cash purchases; these properties cannot be sold for cash. My experience is that, quite often, a local housing association will try to sell off a dwelling, and there are two ways you can sell in an auction. You can sell for the unconditional auction approach, where you give up 10% of the price straightaway and then have to provide the 90% within 28 days, or you can go for the modern market auction, where you can potentially get a mortgage and you have 56 days to come up with the money. I do not know how many people would necessarily be able to come up with a spare £250,000—as happened in a recent sale—for the initial deposit or be able to come up with the rest of the money within 28 days, but that is the basis on which housing associations are selling property around the country. I do not think that is right.
How is it that some wealthy person—a developer or entrepreneur—can buy such properties? The property I am thinking of could probably have had two or three houses built on it, with the size of the garden, and yet local people and the local council were not in the position to be able to buy that property. My amendment is quite blunt in seeking to prohibit cash purchases. It is done deliberately to provoke a discussion about who is buying when there is this big sell-off.
I can visualise another property: a block of flats traditionally used by older people. Four years after the sale, again as a cash purchase, it is, surprisingly, still sat there; nothing has happened to the property and it is starting to look downgraded. I wonder if the real strategy is that the property becomes so bad that the purchasers end up getting permission to knock it down. The Minister will recall that, in previous legislation, I tried to encourage noble Lords to get to a situation where we could compel the council—this was for assets of community value, which is a slightly different matter—to use its powers to make sure that properties are kept in good nick. In this case, that has not necessarily been the case. I am trying to stop such behaviour and see what can be done with rural housing, if we are not going to allow people who live there to buy it.
I have a series of other amendments. I have already explained that I have co-signed those which the Local Councils Network suggested. They merit debate and, although I do not agree with every single one of them, I thought it was important to discuss some of the wider points. As I said, I will leave that to the noble Lord, Lord Stoneham of Droxford.
Straightforwardly, Amendment 39 would extend the notification period to eight weeks. The Local Councils Network has suggested that four weeks is simply not enough time for a council or housing association to make a financial decision to purchase a property, which typically requires a formal cabinet decision. It suggests that eight weeks is the minimum needed and that, during that period, if the council or another housing association submits an offer, on the existing use value for social housing, the selling housing association must accept it; if no offer is received, the property could proceed to open market sale, as it does now. I do not know the motive for four weeks, but the case has been reasonably well made for why, if this is intended to allow councils to step in and purchase those properties, eight weeks is more sensible, giving them more time to get their act together.
On Amendment 47, I appreciate we have covered this issue in previous debates. I forgot to mention it earlier, but I had not tabled amendments to those amendments. If I think about areas with populations of about 3,000, for house occupation we are talking, on average, about 1,400 houses. What most people would consider to be rural is probably quite a bit smaller than that, so I have proposed the figure of 1,000, so that we can think that through. I am conscious that we have already had the debate on what rural is, so I do not expect the Minister to respond on Amendment 47. Amendment 46 is still there, and I hope that the noble Lord, Lord Cameron of Dillington, will not be upset by my tabling an amendment to his amendment.
Having moved Amendment 36, I may come back to some of the other amendments to which the noble Lord, Lord Stoneham of Droxford, will speak.
The Bill’s response to this phenomenon, which has become surprisingly extensive, is to require notification of the plan to sell to be given to the local authority and to local social housing providers. The housing association would be prevented from selling the home for four weeks after it had served notice of its intention. This is a very modest step to discourage loss of stock, which may then be acquired by less scrupulous landlords. Disposals are particularly undesirable where the same local authority may see the property relet by a private landlord at a much higher rent, not least as temporary accommodation. This is not good value for money.
The Chartered Institute of Housing makes the additional point that housing associations need to notify local authorities of a planned sale so that councils’ strategic plans for future development can be determined on the basis of what is happening to the existing stock. But the four-week notice period to be given of a sale presents a very tight timetable for local authorities to find another housing association to purchase the home, to do so themselves or to find funding for the same association to repair and improve the property it owns.
Amendment 37 would require notification to the social housing regulator, as well as to the local authorities, and would enable the social housing regulator to keep a record of what is going on, assess the impact and decide whether changes in its own policy are worth while. The housing associations are complaining that the reason they need to sell property that would otherwise have a decent life is that the regulator is imposing upon them all kinds of additional burdens that they then have to fund: regulatory measures, minimum energy-efficiency standards, building safety costs following the ghastly Grenfell Tower tragedy, and Awaab’s law where housing associations must now complete works on cold and mould in fixed timescales. All these measures are requiring and pressurising housing associations to spend more on their existing stock of property, and that is given as a reason for needing to sell to make up the balances they need. Notifying the social housing regulator is important in informing the regulator of what these pressures mean in real life to the housing associations.
The main amendments I have put forward in this group are Amendments 38, 41 and 42. These go further than just informing the local authority or other local housing association that a property is being disposed of, and would actually put a right to refuse in the hands of a local authority or the local registered provider to obtain the property at existing use value. It would strengthen the mechanism and the incentive for somebody to step in to save this property for social use, rather than allowing it to go out into the private market.
That is why these amendments are important: they would give the right of first refusal both to local authorities and to local housing associations to buy the properties. Social housing is very valuable, and we must keep it as much as we can. Obviously, there will be circumstances where it might not be appropriate, but these amendments are intended to put safeguards in and to give every incentive for a local authority or a housing association to participate and acquire these properties so we do not lose them as social housing units. I hope that the Minister will give very close consideration to accepting some of these improvements.
There is a need for both our amendment and the Government’s existing Clause 11. The Bill’s current amendment to the Housing and Regeneration Act simply requires registered providers to notify local authorities of a disposal, but with very short notice, as has been noted. It would not prevent such disposals, nor open the opportunity for the registered provider and the local authority to explore other options that would avoid the disposals in rural communities, where these may be the last social housing in a rural area.
My amendment would give the rural local authority early visibility of stock conditions, asset plans and disposal strategies and would enable local authorities to plan for likely losses as well as new supply. It would open opportunities to consider purchase, retrofit, renovation, rural regeneration or other interventions before homes and land are lost permanently. Could local authority funding be available to fund replacements in the communities concerned? Could local authority funding help modernise the property or properties, making a sale unnecessary? Perhaps a package of rural sales and rebuilds could attract Homes England regeneration funding. Or, given the large plots of some of these homes, could everyone get together to redevelop the site to provide more homes?
In effect, this would be a pre-emptive stage before any decision to sell is taken. I hope that this kind of information sharing would also lead to a better partnership working between registered providers, local authorities and community stakeholders. However, I should say that to find the right solutions takes time—hence the need in our amendment for a 12-month notice.
As it stands, the current amendment in Clause 11 is more suited to non-rural areas, where there is more social housing and there are more opportunities for replacement. A disposal in these locations would not be as catastrophic as losing the last affordable home in a village or undermine the local authority’s strategy priority to support rural affordable housing delivery and sustainable communities. The notification of a proposed sale will still be important, giving the local authority some time to consider repurchase or using resources to bring a home up to standard. However, I am very concerned that four weeks is a totally inadequate period for local authorities to master the necessary resources for these actions; even 12 weeks would be pushing it. In rural areas, where a long-term strategic approach is necessary, I believe that constant communication and at least 12 months’ notice of an intention to sell will be the least amount of notice necessary.
Amendment 4, tabled by my noble friend Lady Taylor, seeks to remove right-to-buy eligibility from residents who own other residential property. It is a sensible measure to ensure that a new, reformed right-to-buy system is fair, proportionate and offers value for money.
Disposals can be a proportionate, effective and constructive tool used by housing associations as part of their long-term stewardship of social housing. The National Housing Federation has argued that requirements under new Section 171A strike an appropriate balance between a line for effective collaboration between housing associations and local authorities without placing undue restrictions on effective stock management. However, housing associations have emphasised the importance of retaining flexibility to make the best decision for individual properties. Anything which limits this choice risks having a detrimental effect on housing associations’ ability to make prudent decisions about the best way to manage their homes in the long term. A right of first refusal to local authorities, as set out in Amendments 41 and 42, would impose restrictions on this flexibility.