A leading expert on housing has slammed the Government’s flagship policy of extending Right to Buy, saying it will be ‘disastrous for rural communities’.
But Professor Mark Shucksmith OBE, director of the Newcastle University Institute for Social Renewal, is not the only doubter and the policy has sparked criticism on both the national and local stage.
As part of the Queen’s Speech, the Government introduced a ‘ground-breaking’ Housing Bill, with the extension of Right to Buy to 1.3million housing-association tenants perhaps the most eye-catching aspect.
Communities Secretary Greg Clark said: “Our Housing Bill will offer more than a million people a helping hand onto the housing ladder.
“That is what a government for working people is about – making sure people have the security they need to build a brighter future for them and their families.”
The Bill includes a comprehensive range of measures to offer housing-association tenants the chance to benefit from the same opportunities council tenants enjoy, with significant discounts to buy their homes.
According to the Government, receipts from selling current property will help build replacement affordable homes on a one-for-one basis.
However, Professor Shucksmith is among those who is far from convinced, saying ‘the plan makes no sense’.
“There is already a shortage of affordable housing, especially in rural areas where there is little social housing,” he said.
“Rural house prices are on average 26 per cent higher than in urban areas, and the ratio of house prices to local earnings is even worse.
“Disposing of housing-association stock, at great cost to the taxpayer, will make the impact on rural communities much more serious.
“We are already seeing those on low and medium incomes, and especially young people, priced out of small towns and villages across the UK. With housing-association properties sold off, and unlikely to be replaced in any substantial quantities, the wealth divide in rural communities will deepen even further.”
Professor Shucksmith has spent years researching the effect of housing affordability on social change in rural areas and argues that not only will the forced sale of housing-association properties affect the social and demographic make-up of rural communities, but will also have a knock-on effect for local employers.
“In its Rural Policy Statement in 2012, the Government recognised the social and economic importance of affordable rural housing,” he said.
“With rural areas becoming increasingly socially exclusive, local businesses – from farms and shops to accountants and software developers – will find it even harder to attract the young, skilled, ambitious people they need.
“We urgently need more affordable homes to be built, not the disposal of the few that remain in rural areas.”
Another high-profile critic of the policy is Lord Kerslake, head of the civil service between 2012 and 2014 and also permanent secretary of the Department for Communities and Local Government until earlier this year.
In the House of Lords last week, he said that in its current form, the policy seemed to him ‘to be both wrong in principle and wrong in practice’.
He said: “It is wrong in principle because these are not the Government’s assets to sell.
“Housing associations are private, mostly charitable, bodies. They have built up their housing stock over long periods of time to provide for those who are most in need.”
He continued: “The plans are wrong in practice because they will not advance the Government’s stated aims; indeed, I fear that they will move them backwards.
“The proposed RTB policy, combined with changes in benefits, will make housing associations much more cautious about investing in new-build programmes and, crucially, lenders much more cautious about lending.
“The knock-on consequences of this on new-build and regeneration schemes could be very serious.”
Berwick’s newly-elected MP, Anne-Marie Trevelyan recognises the concerns about the Right to Buy extension, but says it is ‘absolutely the right thing to do’.
This is because ‘housing-association properties were excluded historically and there was an imbalance which needs to be rectified’.
“The good thing with the new policy is the money will remain in housing-association or local-council control in order to be able to build new homes,” she said.
“It’s vital that happens and I will be focused on the legislation to check the right safeguards are put in place.
“There’s more to be done, but getting Right to Buy across all sectors is the right thing to do.”
Mrs Trevelyan added that she had already been in contact with Housing Minister Brandon Lewis about the wider issue of housing, saying: “In our rural areas, we do have some severe shortages.
“We must effectively generate a substantial new-build programme for the rental market to make sure we are meeting needs of families who are stuck on waiting lists, in some cases for many years.”
One of the concerns raised by Lord Kerslake on Tuesday was real doubts over ‘whether the receipts from the sale of high-value, local-authority properties can simultaneously cover the cost of the discount, the re-provision of new affordable homes and a contribution to the brownfield regeneration fund’.
Mrs Trevelyan said: “That’s why we need to make sure there’s access to funding so replacement and new housing can be provided. It’s the beginning, not the end, of the process.
“We need to correct a long-term failure of successive governments to tackle this issue.”
This secondary strand of the policy – the sale of high-value, local-authority properties (when they become vacant) to help fund the programme is being watched closely by the Labour administration at Northumberland County Council.
A Labour group spokesman said: “The policy can’t come into force until the current housing laws are changed.
“We’re aware that a number of housing associations are also preparing legal challenges to the proposed policy.
“As currently described, we don’t think the policy would have an impact on Northumberland and the council’s housing stock, given the authority has little or no so-called ‘high-value housing stock’.
“The Government policy seems to be aimed at metropolitan areas, not areas like Northumberland, but we’ll be monitoring the development of the policy closely.”
‘This is akin to trying to fill a bath with plug out’
Key figures at two housing associations which operate in north Northumberland have expressed grave concerns about the new policy.
Among the main worries are how Isos Housing and Four Housing would continue to provide more affordable homes if Right to Buy was brought in for their properties.
Plus both assocations have charitable status and current charities law would prevent the sale of assets at below market value, necessitating a change in legislation.
Paul Tanney, chief executive of Four Housing, told the Gazette: “The Government has said it will make up the gap between what we sell it for and market value.
“I haven’t seen the details yet, but if we sell an £80,000 house for £40,000, we will inevitably have a mortgage out on that and there will be grants to be paid back on that.
“We think the grants will be able to be carried across, but we will have the existing mortgage to pay for and then the replacement value is likely to be between £100,000 and £120,000. We are going to have to borrow more.
“Councils are going to be forced to sell off their most expensive houses to pay for this so you are losing two houses to pay for one.
“In rural Northumberland and some of the coastal villages, where there’s a small number of houses already and we see the second-home issue making houses unaffordable, there will be less social and affordable houses so where are young families going to live?”
He referred to Four Housing’s development at Lint Gardens in Alnmouth, where the properties were all let to people with local links, saying the policy put these types of schemes in jeopardy.
“At the moment, we have a healthy business plan and can borrow money at quite good rates,” he said.
“A lot of the ratings agencies, like Moody’s, are saying housing associations will get a lower rating so it will increase the cost of borrowing.”
A recent report in the Guardian estimated the cost of extending Right to Buy to be £6billion.
“We only need £20,000 to £25,000 of grants on a new house and we borrow the rest,” Mr Tanney said.
“If they give us that money, we could build a lot more houses and that’s a lot better way of dealing with this.
“Under the existing Right to Buy, only one in 10 homes has been replaced.”
Michael Farr, executive director of development for Isos Housing, said: “We have some real concerns about the impact of Right to Buy on our ability to provide more affordable homes, and that applies in both urban and rural locations.
“We are supportive of people getting on in life, and the aspiration to own your own home, but we believe there are better ways of doing that than selling off existing social rented homes.
“For instance, we have been building homes for shared ownership for many years.
“As our trade body, the National Housing Federation, has said, building new affordable homes while being obliged to sell off your existing stock, is akin to trying to fill a bath with the plug out.
“Isos has a strong track record of building affordable homes in rural Northumberland.
“In recent years, we have delivered schemes in Lesbury, Beadnell, Belford, Chatton and Falstone. We are also building a 58-bed Extra Care scheme in Alnwick.
“Under Right to Buy, we could still develop new homes, but they would not add to the existing stock of affordable homes as they do now.
“Even if the funding was found to replace Right-to-Buy homes like-for-like, there would still be a significant time-lag before those new homes could be built.”
Details of the proposals
Discounts available under Right to Buy were significantly increased in 2012 and currently stand at a maximum £77,900 outside London and £103,900 in the capital. But this only applies to those who live in council housing, or whose homes have transferred from a council to a housing association. It means social tenants living in the same neighbourhood can have vastly different levels of discount – or no Right to Buy at all. Communities Secretary Greg Clark said the Housing Bill will ‘create a level playing field’.
The sales receipts will be put toward new affordable homes, which, along with government funding will allow one-for-one replacement in the same area. Rather than one rented property, there will be two properties, an old one with a new homeowner, and a new one available for those in need on the waiting list.
To fund this policy, the Housing Bill will also require councils to sell their most expensive housing when it falls vacant, with the receipts used to provide new affordable homes in the same area, and the surplus used to fund the Right to Buy for housing-association tenants.