Pilot scheme will cost £200m with commitment to build new homes to replace lost stock

This article is more than 2 years old

This article is more than 2 years old

The government has announced a £200m pilot scheme to extend right to buy to housing association tenants, with a pledge to replace each property sold with a new affordable home.

Under current rules, council housing tenants have the right to purchase at a discount rate the property they rent. On Thursday plans were unveiled to extend that right to those who let from a housing association across 70 local authorities in the Midlands.

The announcement came days after the government scrapped a plan from 2015 to force the sale of council homes in areas with high-value properties, following fierce opposition from councils.

That proposal had been intended to fund the national rollout of the right-to-buy policy for housing associations tenants. It is now unclear how the nationwide scheme will be paid for.

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John Healey, the shadow housing secretary, called it a “wasteful policy” that would now mean public money being spent selling off affordable homes at a discount when it should be used to build them instead.

“Right to buy has decimated our council housing stock in this country,” he said. “By expanding this policy, the Tories are only going to make the housing crisis worse.”

The Midlands pilot announced on Thursday will be funded by £200m from the Treasury, funding already earmarked in the 2017 budget, with places on the scheme allocated via a ballot. Tenants have one month from the scheme’s launch to make their application.

The housing secretary, James Brokenshire, said money from the discounted sales of housing association homes would be used to fund their replacements.

“This government is committed to providing opportunities for people to get a foot on the property ladder and to have a place they can call their own,” he said.

“Our £200m investment into the Midlands voluntary right-to-buy pilot is the first step in helping housing association tenants realise their dream of homeownership.”

Facebook Twitter Pinterest David Orr of the National Housing Federation. Photograph: Martin Godwin/Guardian

The National Housing Federation, which has worked with the government on the design of the scheme, said it was vital homes were replaced.

Chief executive David Orr said: “It will be a success for everyone involved only if every home that is sold is replaced with a new affordable home, and if the application process is as smooth as possible for tenants.

“This scheme must empower social housing tenants and meet our own ambitions to deliver the homes the country needs.”

Experts sounded a note of caution. David Pipe, policy and practice officer at the Chartered Institute of Housing, said: “Our concern is that even if this is achieved, the replacements won’t necessarily be like for like.

“We may see social rented homes being sold and replaced with homes that are let at higher rents, or we could see homes being sold in one area and replacements built somewhere else. So there remains a real danger that some areas will still lose much-needed social housing as a result of the pilot.”

The Ministry of Housing, Communities and Local Government said the ballot would be the fairest way of coping with the anticipated high demand, as opposed to a first come, first served basis that could disadvantage residents with accessibility issues, or those who could not get on to the internet in the first few days of opening.

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A key test for the pilot will be the feasibility of so-called “portability”, by which housing associations will be given discretion over which properties they sell and where tenants who want to buy a property that is exempt can be offered an alternative home to purchase.

Pipe argued that a full rollout of the scheme would not be the best use of public money.

“At a time when we desperately need more affordable housing, this money would be better spent on building new homes for rent and for shared ownership,” he said.

About 94,000 council housing tenants have exercised their right to buy since 2010.