The Housing (Right to Acquire) (Discount) Order 2002

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The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Tony McNulty): I, too, am delighted to serve under your chairmanship, Mr. Cran. Our paths have crossed in other dimensions, but fortunately for the rest of the House, we had to be silent then. It is nice to exercise the vocal chords again, in whatever capacity.

I am grateful to the hon. Member for Cotswold for fully supporting the order, regarding it as entirely uncontroversial and then asking me a bunch of questions on it, which I shall try to answer in my concluding remarks.

The number of completed right to acquire purchases is updated slightly from the 2002 answer given by my hon. Friend the Member for Northampton, North (Ms Keeble). I shall give the purchases year by year, as the hon. Gentleman asked me to do. They are as follows: 62 in the years 1999-2000 following the two-year qualifying period, 18 in 2000-01, 38 in 2001-02 and, so far, only two in 2002-03. Although, as the hon. Gentleman rightly said, the genesis of the proposal goes back to 1996, given the qualifying period, it has been online and functioning only from 1999-2000. These are early days, but in relative terms the figures are low; at present, there are 12 purchases in London, a number that has not changed since the answer that the hon. Gentleman was given earlier, and the exemptions he referred to remain in place.

Many of the comments made by the hon. Member for Cotswold and the hon. Member for Bath (Mr. Foster), apart from a segueway into a revision of Liberal history, were about the wider context of the debate, to which we will return. Hon. Members will forgive me if I do not go down that road as I want to focus on the order. However, I take into account many of the important points made by both hon. Gentlemen in respect of the wider debate.

The tenants' contribution of 50 per cent. of the purchase price is to ensure sustainable house ownership. The contribution takes account of low-value properties where the discount may exceed their value. In this entirely routine order, there has been no attempt to go up and down within the bands in each authority, save to reflect both the registered social landlord stock in any given area—the RSL market within the area—and, almost on a property-by-property basis, the shape of the debt profile per property. It is not about decreasing in some areas and increasing it in others. In the sense that the order is routine and mechanistic, no political or policy-driven tweaking is taking place. I assume—if I am wrong, I shall let members of the Committee know—that because Durham is unified and Devon is split, it reflects change to the debt profile in particular parts of Devon and the unification of the market or RSL stock profile in Durham so that the same band applies there.

Mr. Clifton-Brown: The Minister said something interesting—that the changes affect not only market conditions but the individual stock within a particular registered social housing area. If a registered social landlord acquired 10 successful right to acquire

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applications, would the Minister cut the discount on the ground that it would be unfair on tenants within the RSL?

Mr. McNulty: I was pretty sure that I said nothing interesting and, with no mal intent, the hon. Gentleman misinterpreted both elements of what I said. The position does not reflect the market. It reflects the RSL market in terms of the number of available properties in an area. The debt side reflects the level of debt on each particular property to which the right to acquire may apply, which is not quite the same as saying that the changes reflect the market in a given area. Discount relates to house values in an area with all three elements applying. It partly reflects house values, but also the RSL stock and the debt load or profile per household. I was trying hard not to say anything interesting, so I was worried when the hon. Gentleman made his comment.

Mr. Clifton-Brown: May I probe the Minister further, as he did not answer my question directly? He said that it reflects the registered social landlord stock in an area, so I repeat my question: if a particular registered social landlord found itself with 10 successful rights to acquire—a large number out of the 60—would the Minister then introduce another order to cut the discount for the particular area because it would be unfair on tenants?

Mr. McNulty: No, entirely not. If we retain the mechanistic renewal of the order, the next one would be based on taking stock of what is left of RSL stock in the area, and the value and debt profile of each property within it. The order is about the potential right to acquire what is left of RSL stock, not what has gone before. At this stage, there is no accounting for drastic loss of a significant proportion of RSL properties in a given area because of a right to acquire. That may come in future, but not now. The right to acquire is a right and, in view of the order, it is demand led. We may be able to examine the broader context, but I shall not explore those dark, devious and interesting avenues today.

An important issue relating to the wider backdrop of the order was made about the countryside. The exemption is important. As the hon. Member for Cotswold said, in rural areas of fewer than 3,000 people, the right to acquire in RSL units is forfeited. That makes perfect sense: it must be difficult, if not impossible, to replace RSL units in such small communities. As an aside, all the receipts from right to acquire go back to the RSL and contribute to the potential to realise and generate further units. It is slightly different from the right to buy in that sense. I accept that we might need to reflect further on the rural dimension in the broader context.

The point about the Guinness Trust is a fair one. However, it was felt that the right to acquire should not and could not happen because it would be wrong for us to compel charitable housing associations to dispose of their properties. It is not entirely accurate to say that if those tenants do not have the right to acquire they will have no other recourse to home ownership. There is still Homebuy, which was the

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tenants' incentive scheme, and the voluntary purchases grant route. The right to acquire is not the only option. It is an entirely uncontroversial, fully supported and consensually based order.

I will explore further the point about the increase in debt being a perverse incentive almost to foreclose any notion of tenants getting the right to acquire. I do not think that it is, given the backdrop of other technicalities and the hugely complex financial regime under which RSL sits. I will get back to the hon. Gentleman about that. I have done Durham and Devon. I do not mean that in a nasty way. The grants are not cut. They are varied to reflect what I said earlier. We will return to the issue of rural areas. That is worth looking at, although not in the context of the order.

The last point was interesting. Precisely because the right to acquire, as constructed at present in the RSL sector, is demand led we have not set any targets for the number of right to acquire sales. That again might go into the pot of some wider housing debate. Who knows? The one thing that I have learned in four or five weeks is that I speculate at my peril. I shall speculate in about three weeks' time when I am having a nice drink down in the south of France, but not here. Having conjured up that picture for the Committee, I commend the order—

Mr. Clifton-Brown: I wish the Minister good speed to his drink in the south of France.

Mr. McNulty: Perrier of course.

Mr. Clifton-Brown: Could the Minister just answer one question that I raised? It is of particular concern to those hon. Members who represent areas where house prices are very low. I gave the example of Burnley, where the £9,000 grant has been cut by £1,000 from last

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year. Cutting the right to discount will make it more difficult to acquire in those areas. I should be grateful for the Minister's comments on that.

Mr. McNulty: As I understand it, that reflects the prevailing market in the area. We cannot get to a stage where the discount is worth more than the property, because that imbalance knocks the emphasis behind the right to acquire out of kilter. I had the great fortune to visit Oldham and Rochdale in the last two weeks. I certainly saw some examples of abandonment in Oldham, although fewer in Rochdale. That issue needs to be addressed. If I am wrong I will get back to the Committee, not just the hon. Gentleman, but I do not think that that will act as a disincentive to people in those areas.

The decline in discount simply reflects what I have been saying all along: it is partly the prevailing market in the area, partly the RSL stock and partly, certainly where the property market has essentially collapsed or is in great difficulty, a recognition of the decline in values. In each area the right to acquire provisions need to follow the drift of all those elements. One can imagine how the ratio or gearing between the current property values of each property and the debt profile per property must be phenomenally dysfunctional for RSL landlords in those areas. The right to acquire order and the changes to it just try to follow that. Again, if that is wrong I will get back to the hon. Gentleman. I will stop saying that eventually, but I have to cover myself all the time.

As I was saying before the hon. Gentleman intervened so politely, in that context and given his opening remarks, I commend the order to the Committee.

Question put and agreed to.


    That the Committee has considered the Housing (Right to Acquire) (Discount) Order 2002.

        Committee rose at Eleven o'clock.

The following Members attended the Committee:
Cran, Mr. James (Chairman)
Ainger, Mr.
Barker, Gregory
Clifton-Brown, Mr.
Doughty, Sue
Foster, Mr. Don
Henderson, Mr. Ivan
Heyes, Mr.
Jackson, Glenda
Lucas, Ian
McNulty, Mr.
Steinberg, Mr.
Whitehead, Dr.

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