Housing and Planning Bill

Written evidence submitted by Gary Jones (HPB 53)

Unfair exclusion of RTB discounts from Shared Ownership tenures

Summary

1. This written evidence attempts to draw attention to, for the benefit of Committee members, the fact that the extension of the Right To Buy (RTB) scheme to Housing Association (HA) tenants (a core provision of the Housing and Planning Bill 2015-16 (HPB) under Part 4 Chapter 1 Section 56), primarily the monetary discounts accruing from this extension, EXCLUDES Shared Ownership (SO) tenures.

2. I put forward that exclusion of SO tenures from RTB discount eligibility is unfair and discriminative when compared with traditional tenures, and does not fall in line with a key priority of HM Government for ‘supporting home ownership’ and to ‘enable many more tenants to achieve their aspiration to own their own home’.

3. I enquire whether the recent agreement between the HA sector and HM Government (as orchestrated by the NHF) for voluntary application of the RTB extension to HA tenants could allow HAs to include SO tenures on a case-by-case basis, or whether this will solely be decided by HM Government.

Detailed Comments

4. I have been a tenant of a registered provider/HA property for about ten years, under an SO scheme. I currently own a half share of the property, and pay rent and a service charge for the remaining unowned half to the HA. Unfortunately, although I nominally have the right to buy as part of a ‘stair-casing’ procedure, I am not in a position financially to purchase the remaining half (or a proportion thereof) for the foreseeable future and so have to continue to pay rent for the unowned half (which increases with RPI annually), never reaching my aspiration of full home ownership. Couple this with mortgage premiums and interest payments related to financing for the owned half of the property, then in real terms I am paying for both halves of the deal (owned/unowned shares).

5. I recently wrote to the RTB Team at the DCLG and was told that persons who own a share in their home, regardless of how large or small, are EXCLUDED from the HPB's RTB extension to HA tenants and therefore RTB discounts, even if they qualify against all other RTB criteria (such as the minimum 3 year rule).

6. The RTB extension to HA tenants through generous purchase discounts is designed to help tenants achieve home ownership, a key priority for the Government, and one would hope 'home ownership' means 'full ownership' and not 'partial' or 'shared ownership', such that having to pay rent to landlords in perpetuity is eradicated where possible and allow individuals to accrue full value in their home. Otherwise, the Government’s aim loses potency and is a little disingenuous.

7. To exclude tenants who already have a share in their home from the RTB extension and discounts thereof is inherently unfair and discriminative to those who put their savings and/or borrowed capital (incurring credit interest) into buying a property share.

8. Tenants, involved in typical SO schemes, receive NO government-backed discount and usually have to buy a share based on the open market valuation of their property so have received no governmental support in this respect. Some SO schemes offer low share percentage entry levels, e.g. 10%-25%, and it seems particularly unfair that these individuals/households are excluded from the RTB extension when tenants with 0% share can enjoy a discount of up to £77,900 across England. There is no significant difference in the financial standing or aspirations of a 0% share-owning tenant and a 10% share-owning tenant, but the former can enjoy a significant monetary discount and the latter cannot under the current plans. This cannot be fair.

9. In addition, I envisage that the exclusion of SO schemes from RTB discount eligibility will act as a deterrent for people considering the SO tenure in the future, so will harm its uptake. Why should a potential tenant enter an SO scheme that offers open market purchase prices when a traditional non-share ownership tenure offers substantially discounted prices (after 3 years of tenancy)?

10. I was fully expectant that, under the provisions of the HPB, RTB discounts would be available to those HA tenants already owning a share of their home for these reasons. But it seems, to my disappointment, that this is not presently the case. Please could you discuss why HA tenants under an SO arrangement are excluded from enjoying RTB discounts, and whether this position might change as its inherent unfairness becomes apparent to Committee members?

11. One possible way forward might be to use the voluntary nature of registered providers offering RTB to tenants, and allow providers themselves to offer ‘RTB-equivalent’ discounts to SO tenants on a case-by-case basis as well as to traditional tenants? HM Government would need to allow grant funding by the Secretary of State (see HPB section 56 paragraphs (1) and (2)) to be additionally used for this scenario.

Thank you for your consideration of these matters.

November 2015

Prepared 17th November 2015