Wednesday, 15 March 2017

Right to Buy set to be abolished in Wales

(Pic : The Guardian)

The controversial "Right to Buy" scheme – a flagship policy of  Margaret Thatcher – is set to be abolished in Wales as part of a Bill formally introduced by Communities Secretary, Carl Sargeant (Lab, Alyn & Deeside), yesterday afternoon.

Abolition of Right to Buy Bill (pdf); explanatory memorandum (pdf).

Why scrap Right to Buy?

Right to Buy (also known as Right to Acquire in certain circumstances) was introduced so social housing tenants could buy their property at a discount from the market price. As a result, it's estimated Wales has lost 139,100 social houses (-27%) since 1980 while pressure to provide affordable and social housing increases.

The number of tenants taking up Right to Buy has fallen, in part due to the Great Recession and tightening of lending by mortgage providers. There's also evidence that every house sold under Right to Buy results in additional cost to the public in things like housing benefit, particularly where the homes end up in the private rented sector.

In addition, local authorities already have the right to suspend Right to Buy under the Housing Measure 2011, but to date only 5 councils in Wales have applied for a suspension. There are also estimates that 18,000 social houses and an additional 11,000 "affordable" homes will required over the next five years.

The Welsh Government have decided that, to protect current and future social housing stock, they'll introduce a blanket ban on Right to Buy across the country – a move supported by 63% of respondents to a public consultation, but it's from a very small sample size (94) so I'd be careful about drawing any conclusions from that.

What does the Bill propose?

  • Right to Buy (and Right to Acquire) will be suspended across Wales for existing and new social housing, except under a complicated set of circumstances where a tenant moves as the result of a court order to "suitable alternative accommodation".
  • Removes the power for Welsh Ministers to make grants for housing discounts with respect Right to Buy/Acquire to registered social landlords and housing associations.
  • Places a legal duty on the Welsh Government to provide information to tenants and prospective tenants of the effects of the Act within one month of the Act coming into force. Social landlords will be obliged to provide tenants with a copy.
  • There'll be a "grace period" of one year from the passing of the Act in which Right to Buy will continue for existing social housing stock. This won't apply to new-build social housing, for which the Right to Buy will be suspended 2 months after the Act comes into force. This is to comply with the European Convention on Human Rights.

As the Bill is likely to have Plaid Cymru support it's passing for the time being is a formality, it's just a matter of working out the finer details.

Costs & Benefits

There'll be a direct cost to the Welsh Government and social housing landlords of £342,000, mainly in the drafting of new guidance and providing tenants and prospective tenants with the right information.

With regard the indirect costs to the social housing sector, the information is very sketchy indeed. The variable effects would include: changes to rent income, money raised from sales before any Act comes into force, additional maintenance and management costs. The Welsh Government estimate this could be anywhere between a net costs of £75.3million to a net benefit of £57.4million – a range of £132.7million, which is difficult to base any solid judgement on. This will probably be the area under closest scrutiny I'd imagine.

It's estimated abolishing Right to Buy and Right to Acquire would retain somewhere between 1,480 and 1,585 social houses – but that still means at least 3,280 would need to be built each year to meet demand. Based on examples in Swansea and Carmarthenshire, take-up of Right to Buy could spike by anywhere between 20-50% in the one year "grace period" before the ban comes into full effect (equating to ~240-300 sales).


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