The voluntary agreement between government and housing associations will give householders the chance to purchase their home with Right to Buy discounts. The pilot is being used to develop the national scheme.
The extention of Right to Buy to 1.3 million housing association tenants was first announced in May 2015, with applications open from January 2016.
The government announced that there would be a one-for-one replacement of the homes sold with new affordable homes. Funding for the discounts would be obtained from local authorities, by requiring them to sell high-value council homes as these fell vacant.
It also made a commitment that for each of these council homes sold, an additional affordable home would be provided on at least a one-for-one basis (and at least two-for-one in respect of council homes sold in London). The Department’s expectation is that the sales of high-value council homes would pay for the extended Right to Buy discounts, thus making the policy fiscally neutral.
However a recent Public Accounts Committee criticised the Right to Buy extension, arguing that despite the implications and complexity of this policy, the government has not clarified many key details.
The PAC says the Department is offering "only vague assurances as to how this policy will be funded", without producing any figures to demonstrate that additional funding from central or local government will not be required.
Other concerns remain, including the extent to which the new homes funded by this policy will be genuine replacements for those sold, and whether there will be sufficient controls to prevent abuse of the scheme given the significant discounts proposed for housing association tenants wishing to buy.
Stephen Smith, Director of Legal & General Housing Partnerships, has also criticised the scheme, adding: "This will reduce the number of affordable properties available in the UK when we need a greater supply of housing, not less. Forcing the sale of homes at a reduced market value will ultimately disrupt a well functioning sector, making it harder for housing associations to allocate resources to housebuilding and more difficult for investors to lend to them. We hope that the Government reconsiders this decision before fully implementing it, and instead look to other ways in which to produce affordable housing by focusing on the root cause of the housing crisis and tackling supply side issues.”
