Council sets out vision for 'fairer' housing market as Right to Buy conversation continues

The Ministry of Housing, Communities and Local Government (MHCLG) recently launched a consultation seeking views on a series of proposed changes to Right to Buy, which gives eligible council tenants the opportunity to purchase their homes at a discount.

Leeds’s response to the consultation sets out a vision for a reshaped country-wide scheme that would still support routes to home ownership for long-standing tenants but would also, crucially, give councils the resources they need to replenish their depleted social housing stocks.

In its submission to the MHCLG, Leeds calls for a temporary ‘pause’ on Right to Buy – a step that would provide important short-term protection against the sale of existing council homes at a time when many local authorities are facing unsustainable pressure as they work to meet people’s housing needs.

Alongside this, the response says, there must be wider reform of the financing and delivery of affordable housing by councils, with fundamental changes required if cities like Leeds are to build homes at the necessary scale and speed.

In addition, the council argues, other routes to low-cost home ownership – such as Rent to Buy or shared ownership – should be promoted for people to consider as potential alternatives to any reshaped Right to Buy scheme.

Equally, however, Leeds is clear that helping households who want to access home ownership should not mean a loss of council properties that would hamper the ability of local authorities to assist those most in need.

The number of council homes sold to tenants in Leeds since Right to Buy was introduced in 1980 stands at more than 37,000.

Local authorities have long struggled to replace ‘lost’ Right to Buy properties on a one-to-one basis due to factors such as the time needed to develop new sites and the significant discounts available to purchasers, which mean the cost of building a new home is not covered by the receipt from each sale.

These discounts, coupled with the requirement – now ended – for authorities to use a portion of their Right to Buy receipts to repay debt to the Treasury, have deprived Leeds of more than £300m in potential funding in the last 10 years.

The council’s consultation response stresses that, despite the challenges posed by the current system, the city has been able to adopt an “ambitious and proactive” approach to the delivery of affordable housing.

Key to this has been Leeds’s Council Housing Growth Programme (CHGP), which has built or acquired around 700 homes since 2018.

A greater number of affordable homes have also been built in Leeds over the last five years by the council, housing associations and developers than in any other large city in the country outside London. The proportion of these homes that are available for social rent – the most affordable tenure – is above the national average.

The council’s response makes clear, though, that there is still much to do, with more than 28,000 applicants on the Leeds Homes Register and around 5,500 of those classed as being in urgent housing need.

Changes to the current Right to Buy system that were therefore supported by the council in its response to the MHCLG include:

• Raising the minimum tenancy period for Right to Buy eligibility from three to 10 years;
• Giving councils more scope to combine Right to Buy receipts with other forms of grant funding to support investment in new homes;
• Increasing, from five to 10 years, the period during which a person who sells a property purchased under Right to Buy is obliged to repay some or all of the original discount received.

Councillor Jess Lennox, Leeds City Council’s executive member for housing, said:

“As one of the largest housing stock-holding local authorities in the country, we welcome central government’s consultation on the reform of Right to Buy.

“We are clear that routes into affordable home ownership for local residents must be maintained, but this cannot be at the expense of those most in need.

“Long-standing constraints on the use of Right to Buy receipts mean that, despite their best efforts, local authorities like Leeds have been unable to facilitate one-to-one replacement of homes sold.

“Reform of the scheme, coupled with fundamental changes to the financing of affordable homes, can give the country a fairer and more sustainable housing market.

“Our Council Housing Growth Programme, combined with support for strong registered provider delivery, has shown what can be achieved through bold thinking and partnership working, and we now hope to use the same approach to help bring about transformational improvements on a national level.”

Launching its consultation last year, the MHCLG said its proposals for a revamped Right to Buy system would continue to offer a route to home ownership for long-standing tenants but would also help councils “protect and rebuild” depleted housing stocks.

Leeds’s response was prepared following dialogue with partners including Yorkshire Housing and the West Yorkshire Housing Partnership.

Notes to editors:

Further details about initial changes made to Right to Buy following last year’s General Election, the current proposals for broader reform of the scheme and the MHCLG consultation process can be found here.

The term ‘affordable housing’ refers to homes that are available for either rent at below market value or low-cost ownership.

When affordable housing is made available for rent, potential tenures include ‘affordable’ and ‘social’. Affordable rent is discounted by at least 20 per cent from the prevailing local market rate. Social rent is lower than affordable rent and set by a formula tied to local incomes, property size and property value.

The Local Government and Housing Act 1989 required councils to use 75 per cent of their Right to Buy receipts for the paying down of debt to the Treasury. This requirement, since ended, reduced the ability of councils to borrow money for capital expenditure, including construction of social housing.

A registered provider is an affordable housing provider – such as a housing association – that is registered with the Regulator of Social Housing.

ENDS