Boris Johnson is set to lobby the Government, hoping to change its plans regarding the Right to Buy scheme extension, which would offer sales discounts to housing association tenants.
Johnson is proposing an equity loan system similar to Help to Buy, in a bid to avoid councils in the capital’s wealthiest areas from losing too much of their social housing stock.
The Conservative’s Right to Buy extension would be funded by forcing councils to sell of their high-value homes, which would include many parts of central London, to subsidise discounts for housing association tenants who wish to buy their homes.
Under the current Right to Buy scheme, council tenants can receive discounts of up to £104,000 on the market value of the house or flat that they live in. In the general election campaign, the Conservatives pledged to extend this scheme to tenants in housing association properties.
The party also promised that all homes sold would be replaced by new, affordable housing. However, it would be difficult for councils to fund this. Last year, just one new property was built for every 11 council homes sold.
The Conservatives believe that making councils sell their high-value housing will pay to replace both the council homes and housing association properties.
Critics of the system do not think this will work, especially in the capital where land to build replacement houses is expensive and sparse.
The Greater London Authority (GLA), headed by Johnson as Mayor of London, will lobby the Government to use equity loans rather than cash discounts; this will avoid councils having to sell their high-value assets.
It will also allow the Treasury to fund the scheme, similarly to Help to Buy equity loans and ensure that housing associations are fully compensated.
Social landlords support the GLA’s plans. Chief Executive of London social landlord, Notting Hill Housing, Kate Davies, says that it is a good idea and a better solution that the Government should seriously consider.
Deputy Chief Executive of the Chartered Institute of Housing, Gavin Smart, says that using equity loans would be “consistent with other recent Government initiatives, which also use equity loans to support homeownership.”
He believes that equity loans “are attractive because they can be funded by financial instruments rather than borrowing.” However, he warns: “Whether the politics of it stack up isn’t clear at this point.”1
Senior Tories have criticised the plan to sell off council and housing association homes. Head of the Local Government Association, Gary Porter, says: “If councils make money on a council asset, it should stay with councils.”1
Additionally, the former head of the civil service, Lord Kerslake, says that peers of all political parties are concerned. He believes the impact in London would be “truly disastrous.”1
London councils and MPs would like the Government to ringfence any cash made from the sale of council homes in the capital, to avoid it being used to subsidise Right to Buy discounts in other parts of the country.
The Government is set to publish details of how it plans to implement the Right to Buy extension later this year.
A spokesperson for Johnson says that the Right to Buy plans express “a basic unfairness”, by giving housing association tenants the same ownership rights as those living in council homes.
They continue: “The Mayor has been clear that he wants to see all money made from the sale of any London homes retained in the capital to build more replacement new homes, particularly affordable homes.”1
1 http://www.ft.com/cms/s/0/653bdcba-1fd0-11e5-ab0f-6bb9974f25d0.html#axzz3eePufjJb