A voluntary Right to Buy for housing association tenants in England

The statutory Right to Buy (RTB) and assured housing association tenants

The statutory Right to Buy (RTB) was introduced in England and Wales in October 1980. As a rule, assured tenants of housing associations do not have the RTB on the same terms as council tenants.

A commitment to extend the RTB to assured tenants in England

The Conservative Party’s 2015 Manifesto (PDF) included a commitment to “extend the Right to Buy to tenants in Housing Associations to enable more people to buy a home of their own.” Subsequently, the 2015 Queen’s Speech announced a forthcoming Housing Bill “dramatically extend the Right to Buy to the tenants of Housing Associations – putting home ownership within the reach of 1.3 million more families.”

While welcomed by housing association tenants who want the RTB, the announcement generated strong reactions from social landlords. Local authorities were concerned that, as originally envisaged, it would be partly paid for by the sale of their most valuable (vacant) stock.

Commentators questioned whether sales of vacant council stock would generate sufficient funding to pay for an extended RTB. Housing associations questioned the legitimacy of legislating to force the sale of assets owned by charities and not-for-profit companies.

Agreement to extend the RTB on a voluntary basis

The National Housing Federation (NHF), the representative body of housing associations, put an offer (PDF) to Government in September 2015 in which it proposed implementation of an extended RTB on a voluntary basis. The offer was described as a compromise with a view to securing the independence of housing associations and the best deal on compensation (for discounts) and flexibilities (the ability to refuse the RTB in relation to certain properties).

At Conservative Party Conference on 7 October 2015, then-Prime Minister David Cameron said agreement had been reached on the NHF’s offer. During the Autumn Statement and Comprehensive Spending Review 2015, the Chancellor said the extended RTB would be piloted by five housing associations. The pilots completed their work and a report on findings (PDF) was published in January 2017.

The Housing and Planning Act 2016

As there was agreement to go forward with a voluntary scheme, the Housing and Planning Act 2016 did not contain measures to implement a statutory RTB for housing association tenants. The Act does contain measures requiring English local authorities to make an annual payment to Government in respect of expected sales of “higher value” vacant stock.

The intention was to use these payments to compensate housing associations for selling housing assets at a discount to tenants. The social housing green paper (PDF, August 2018) announced the Government would not bring these provisions into effect. This left unanswered the question of how discounts under the voluntary RTB (VRTB) would be funded. Discounts offered under the Midlands pilot scheme (see below) were reimbursed by the Ministry of Housing, Communities and Local Government (MHCLG).

The Midlands pilot scheme 2018

The Autumn Statement 2016 announced Government funding for “a large-scale regional pilot of the Right to Buy for housing association tenants.” After some delay, Autumn Budget 2017 (PDF) confirmed a regional pilot would go ahead in the Midlands in 2018.

The pilot was launched on 16 August 2018 – those interested had to register online before midnight on 16 September 2018. Successful applicants had to apply direct to their landlord to continue the process. Landlords carried out additional eligibility checks.

Guidance (PDF) for associations taking part in the Midlands pilot scheme was published in May 2018. The pilot focused on two aspects of the voluntary agreement not covered by the original pilots, namely: one-for-one replacement; and portable discounts.

An evaluation of the pilot scheme was published on 8 February 2021. At
30 April 2020 there had been 1,892 sales. Findings from the pilot scheme are included in sections 2.2 and 3 of this paper. The Government said the outcomes of the pilot would be assessed before deciding on next steps for the VRTB.

Replacements failing to keep track

The 2015 Government said properties sold under the VRTB would be replaced on a one-for-one basis. This raised questions around how replacements would be financed; the timing of replacement (there will always be a time-lag); and where the replacements would be built. In London, in certain circumstances, there’s a requirement to develop two affordable homes for each dwelling sold.

Comparisons have been drawn with the commitment to replace properties sold since RTB discount levels were increased on 1 April 2012. RTB sales increased from around 3,700 in 2011/12 to around 18,100 in 2016/17. There were around 9,300 RTB sales in 2020/21. The RTB one-for-one additions policy allows for replacement of the homes within three years of the date of sale. Replacement properties are not like-for-like and there’s no requirement for properties to be built in the same area.

The Government’s March 2018 statistical release noted for the first time that housing starts were “falling short” of the commitment to replace additional RTB sales within three years. This trend has continued.

The Midlands VRTB pilot scheme identified the key barriers to replacing the homes sold as land availability and insufficient funding raised from sales.

No roll-out date announced

No implementation date for the VRTB has been announced, but during a speech on 9 June 2022 the Prime Minister said: “I want us to deliver on the long-standing commitment, made by several governments, to extend the right to buy to housing associations.”

On 13 June 202 Michale Gove told the Levelling Up, Housing and Communities Commitee that funding for discounts and replacement homes would come from “across Government”. He also referred to replacing sold homes on a like-for-like basis. The number of tenants able to exercise the VRTB will be capped and will be linked to the level of funding available.

The Minister for Housing, Stuart Andrew has said: “We will be working closely with the housing association sector as we develop the scheme and will announce more details in due course.”