Social Housing Speed Read – New Right to Buy Guidance (RTB)

The guidance was recently updated in April 2018 to reflect the change in the tenants discount.

Background

As local housing authorities and registered providers are already well aware, local housing authority tenants can apply to buy their own council home if it’s their only or main home, it’s self-contained, they are a secure tenant and have had a public sector landlord for three years. Most housing association tenants do not have the RTB. However, if they were a secure council tenant and were living in their home when it was transferred from their council to another landlord, like a housing association, then they may have a ‘Preserved’ RTB or they may have the Right to Acquire (RTA) if they have had a public sector landlord for three years.

What’s new?

The document entitled: ‘Thinking of buying your council flat’, is provided by the Government as guidance for those tenants considering buying where the freeholder is a council, housing association or other social landlord. The guidance was recently updated in April 2018 to reflect the change in the discount tenants may receive and also covers:

• Things to consider before you buy;
• Where to seek help;
• Think before you buy;
• Further information; and
• Useful addresses.

The updated guidance can be found here.

The Government has also updated the booklets it provides to help tenants, including Your Right to Buy your home: a guide and Right to Buy: summary booklet, which give details and examples as well as listing the ‘one-off’ costs of buying. The summary booklet also provides an overview of eligibility criteria, discount levels, the application process, how to take the next steps and useful contacts for free, unbiased advice, including the Right to Buy Agent service.

The Your Right to Buy your home: a guide can be found here and Right to Buy: summary booklet, here.

Council’s spending of RTB income

In terms of sector developments, Enfield Council is set to establish a housing association to spend funds it receives from council tenants exercising their RTB.

Whilst not the freshest idea (Inside Housing report that Enfield Council first approved plans to set up a housing association in November 2015), the establishing of a housing association reportedly serves as method of spending the £154m of RBT receipts the council has to spend between 2018/9 and 2022/23.

As part of the rules enforced by the Government, income received from such receipts must be used within three years and can only fund 30% of new construction. This has prompted local authorities to investigate novel methods in utilising these funds.

Recent examples include:

• Croydon LBC setting up a charity, Croydon Homes, which buys up properties and coverts them into affordable housing.
• Hackney LBC launched a fund for housing associations in respect of building affordable homes.
• Many other authorities have announced that they intend to return large portions of their receipts to the Treasury. Haringey Council has announced plans to return all RTB receipts.

The future

However, some spectators note that existing issues/concerns with RTB persist, namely:

• The Government maintains to support the continuation of the RTB, despite it being discontinued by the Scottish Parliament and Welsh Assembly;
• Council houses are already valued below equivalent properties in the private sector: with critics arguing that the discount is just another bonus which is hard to justify.
• Right to buy fraud is reportedly on the increase;
• Dominic Raab, the Minister of State for Housing and Planning, has just announced that the Government will consult on possible changes to the existing rules set by the Government – potentially raising the 30% cap discussed above.

There is still plenty to consider when considering RTB, and making sure it delivers for all stakeholders, including tenants, housing associations, and the Government.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.