Right to Fail?

The government’s announcement that the Voluntary Right to Buy (VRTB) has been kicked into 2018 will be welcomed by most housing associations (although those who had made business plans assuming a certain level of receipts might be less than happy).

Readers of Inside Housing will recall the fierce debate that took place in September and October last year when the National Housing Federation (NHF) made its offer to then communities secretary Greg Clark.

One of the principal motivations for the offer was to avoid a statutory scheme that would lead the Office for National Statistics (ONS) to re-classify associations as public bodies, (in fact the ONS had already made that decision based on existing regulatory control of the sector).

A year on, and the big question is whether the present outcome is better or worse than if the Housing and Planning Act had included a more detailed statutory scheme for Right to Buy.

I think the jury is still out on that. There was some discussion at the time about Conservative MPs voting it down, but that was unlikely as it would have been dealt with under English votes for English laws.

But there remain a huge number of questions about how the voluntary scheme will work. To begin with, there is no clarity on the sales of higher-value council homes, which, when they were first mooted, were supposed to fund five separate outcomes: fees and administration, debt on the sold property, the VRTB discount, a replacement for the high-value sale and contribute to a brownfield regeneration fund.

“The big question is whether the present outcome is better or worse than if the Housing and Planning Act had included a more detailed statutory scheme for Right to Buy.”

John Perry’s analysis for the Chartered Institute of Housing shows that these sums don’t add up. He estimated that higher-value sales would bring in between £1.2bn and £2.2bn a year, while the Conservative Party had assumed £4.5bn – based on back-of-a-fag-packet calculations. Even the higher figure of £2.2bn would only stretch to funding discounts and would not replace the sold council properties.

That means the gap can only be bridged in one of three ways. First, the higher-value thresholds could be lowered to bring in more receipts – something that would make local authorities even less enamoured of their housing association colleagues, who were called “collaborators” by one senior councillor last year.

Second, the qualification criteria for the VRTB could be raised, for example by setting a 10 or 15 year tenancy qualification bar, something that would call into question the original manifesto commitment.

Finally, the higher-value council sale receipts could be restricted to fund fees, VRTB discounts and paying off debt and not to replace the sold higher-value property. Again, this would infuriate local authorities.

There are also outstanding questions about the enforceability of VRTB. What if associations refuse to comply? The Homes and Communities Agency (HCA) has made it clear that this is a voluntary scheme that they would monitor but not necessarily enforce. Last year’s ballot saw 323 National Housing Federation (NHF) members vote yes, while 279 voted no, abstained or did not vote – so this was hardly a united sector.

I have seen a counsel’s opinion stating that non-compliant associations could be expelled from the NHF for failing to adhere to its Articles of Association. These require all members to “uphold and support the objectives of the federation and… be bound by the obligations on them as set out in these articles”.

Individual tenants whose landlord refused to offer the VRTB could also seek a judicial review on grounds of legitimate expectation and reasonableness. There is also a question on whether the HCA would informally put recalcitrant associations on the naughty step, by removing funding.

As Jules Birch wrote a few weeks ago, ministers appear to be pedalling furiously backwards over the Housing and Planning Act measures.

The act is overwhelmingly an enabling act and yet only one set of regulations has been issued since May. There is still a long way to go on the VRTB and its conjoined brother, higher-value sales. My hunch is that both policies will be quietly ditched or severely watered down.

After all, the politics of the country and the Conservative Party have changed significantly since the Housing and Planning Act was enacted in May and the new ministers in the DCLG have other priorities to deal with.

(This blog first appeared on the Inside Housing website on 6th December 2016)

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