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Registered providers should prepare for the extension of Right to Buy

Implementation of the Voluntary Right to Buy settlement is gathering pace as the sections relating to the extension of Right to Buy in the 2016 Housing and planning Act come into force.

There is still operational detail to come as government works with the National Housing Federation to put in place a framework containing national guidelines on the process. But, following the Federation’s recent bulletin, all registered providers and their boards would be wise to think now about how to respond to the voluntary arrangements.

This should involve making an assessment on what restrictions there are on the disposal of any properties. For example, through nominations agreements; section 106 agreements or restrictive covenants. For many registered providers this could be a complex task involving a lot of work.

Also, it would be prudent for boards to agree their Right to Buy policy looking at eligibility criteria and the application process. And, finally, how they are going to achieve the replacement of properties sold.

Now that the provisions intended to ‘encourage’ local housing authorities to use their high value housing stock to support the extension of Right to Buy are in force many local housing authorities are probably speculating on how much they might be asked to contribute to government under a determination.

We know that this has been a contentious topic and the current state of play probably isn’t helping relations between local housing authorities and their registered provider partners. Particularly at a time when the supply of new affordable housing is so important that everyone involved should be working together to find solutions.                              

The interaction between the government’s plans to introduce new starter homes and the expectation that local housing authorities will assist in providing financial assistance for the new Voluntary Right to Buy scheme is an interesting one.

For those local authorities that feel strongly against the imposition of the sale of higher value properties, there may be a get out of jail card. Under section 74 of the new Act, local housing authorities can reduce the amount to be paid under any determination, with the consent of the Secretary of State. This will apply if they can agree terms under which the local housing authority will provide at least one replacement affordable home for the property being disposed of outside Greater London and two within London.

The interesting thing is that the replacement dwelling can be a starter home rather than an affordable home in the traditional sense. So will local authorities use this as a way of increasing the number of starter homes in their area? If so, this could hamper the ability of government to provide financial compensation to registered providers that have lost stock. Also, will this mean that to replace lost stock more registered providers will have to engage in the supply of starter homes rather than new homes for affordable rent?

First published by Inside Housing on 4 July 2016.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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