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Minister says Government will consult on RTB flexibilities 03/04/2018

In a written statement (HCWS 614) to Parliament on the 29 March 2018, Housing Minister Dominic Raab announced that the Government will consult with the sector on providing greater flexibility around how local authorities can use their RTB (Right to Buy) receipts, and how to ensure that the Government can continue to support local authorities to build more council homes.


In the statement the Minister also reaffirmed the Government's commitment to the RTB and announced that the Government will be rolling out a pilot of the RTB for Housing Association tenants in the Midlands later this year although there was no mention of the High Value Asset Levy.


The Minister's written statement was issued on the day that Parliament rose for the Easter recess and followed quickly on the publication of the latest Government statistics on the RTB which show that the Government is failing on the promised one for one replacement of council housing sold under the Re-invigorated RTB introduced in 2012 under the Cameron Government. 


Under the Government's one for one commitment made under the Reinvigorated RTB local authorities have 3 years from the date of the sale of each additional home to provide a replacement home but can only use RTB receipts to a maximum of 30% of the cost of providing a replacement.


The latest figures show that the Government is currently falling short of its commitment to replace dwellings sold under the Reinvigorated RTB by over 1,000 dwellings: There were 17,072 additional RTB sales between Quarter 1 2012/13 and Quarter 3 2014/15 but only 15,981 additional affordable housing units were started or acquired by local authorities, Homes England and the Greater London Authority between Quarter 1 2012/13 and Quarter 3 2017/18.


ARCH Chief Executive John Bibby comments:


"The Minister's promise to consult on greater flexibilities in use of RTB receipts by local authorities is to be welcomed, but is long overdue. ARCH has long campaigned for such flexibilities and we set out a clear way forward in our list of asks submitted to Government prior to last year's Autumn Budget when we said that to ensure any council properties sold under the statutory Right to Buy are replaced on a 1 for 1 basis the government should allow local authorities more flexibility to make maximum use of the capital receipts from RTB sales and urged the government to:


  • Allow councils to retain 100% of the revenue raised from sales to be reinvested locally in social rented housing.


  • Give councils the freedom to use RTB receipts to meet more than 30% of the cost of building replacement homes, to combine RTB receipts with grant funding, other capital receipts held in the housing revenue account (HRA) or public land and to pass RTB receipts to an arm's length management organisation (ALMO) or another council owned company -provided the money is still reinvested in new homes.


  • Extend the cost floor ceiling, which prevents new council homes from being sold at a loss, from 15 to 25 years.


  • Extend the three-year time limit within which RTB receipts must be committed to five years.


  • Allow councils freedoms to reduce RTB discounts locally, where they are able to demonstrate that they will otherwise have insufficient receipts to enable them to replace homes sold and a reduction in the discount would be unlikely to significantly impact on the volume of sales.


If the Government is serious about consulting on greater flexibilities on use of RTB receipts we will again make the case for these changes. However the Government must go further and recognise thatcontinuing uncertainty about the amount and timing of any future HVA levy is a drag on investment in new housing through the HRA, making it prohibitively risky for many councils to commit to significant housing investment plans, whether in improvements to the existing stock, or new building.


In responding to any consultation on use of RTB receipts we will again call on government to make an early statement dropping plans for introduction of a HVA levy and instead support more council housebuilding by re-instating the principles of the 2012 self-financing settlement."

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