Extending the Right to Buy to housing association tenants Contents

2Replacing homes sold with new affordable housing

13.The Government has made a commitment that each home sold under this policy will be replaced as affordable housing on at least a one-for-one basis within three years, with those high-value council homes sold in London replaced at a ratio of at least two-for one.27 The Government first introduced a similar one-for-one commitment to replace homes sold in 2012, under an initiative known as the reinvigorated Right to Buy.28 We were interested in the Department’s progress in meeting that commitment since 2012. The Department reported it was “on track”, on the strength that it had met its first year’s target, with all homes sold in 2012–13 replaced by the end of 2014–15.29 However, as the NAO demonstrated in its Memorandum, the rate of replacements would need to accelerate five-fold in order to meet the target for 2014–15.30

14.The Department’s replacement target under the reinvigorated Right to Buy is that construction on a new home has to be started within three years of the previous home being sold. We asked how many new homes had been completed, ready for a household to move in, since 2012. The Department told us that by the end of 2014–15 it stood at 1,104, only just over a third of the number of sales attributed to the reinvigorated Right to Buy in 2012–13.31 Another feature of the Department’s target is that local authorities can meet it, not just through building new homes, but through acquiring existing homes.32 Reports in the media have suggested that some local authorities have in this way bought back ex-council homes at market price which had previously been sold at a discount under the Right to Buy.33

15.The National Housing Federation was confident that replacement on at least a one-for-one basis under the new policy of extending the Right to Buy could be achieved in respect of those homes sold by housing associations. However, it acknowledged that new housing would often be built in a different area to that where homes had been sold.34 The Department concurred, saying it was harder for some London boroughs to build new affordable housing, owing to local land values.35 Indeed, the Department was clear that one-for-one replacement did not mean like-for-like; as with the reinvigorated Right to Buy, new homes can be a different size and in a different area, and may cost more to rent.36 In addition, under the Department’s new policy, the replacement homes can also be built for sale, for example as Starter Homes (costing up to £250,000 or £450,000 in London, to be available at a 20% discount to first-time buyers who meet certain criteria).37

27 C&AG’s Memorandum, paras 1.1 and 1.5.

28 C&AG’s Memorandum, para 2.1.

30 C&AG’s Memorandum, para 2.12.

31 The Department implied this was an understatement, as homes built by the Homes and Communities Agency and Greater London Authority ought to be added to this total, but did not provide any figures. Qq 175–6.

32 C&AG’s Memorandum, para 2.5.

36 Qq 49, 81–2; C&AG’s Memorandum, paras 2.6–2.7.

37 C&AG’s Memorandum, para 1.5.

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Prepared 26 April 2016