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Right to Buy deal – the unanswered questions

30 September 2015 • Jo Loake

The voluntary Right to Buy deal announced at the NHF conference yesterday (24 September) has sent further shock-waves through the sector, with RPs having just a week to express their support – or otherwise – for the new proposals.

With details scant about the new deal, Crofton’s Head of Governance and Regulation Jo Savage, asks some of the key, and so far unanswered, questions that David Orr’s announcement has raised.

  1. Which properties will this apply to? If grant funded, will RPs be expected to repay the grant or will the sales proceeds be theirs to retain and use to replace? If they get to retain the proceeds, will there be restrictions on what they can build?
  2. Will RPs be ‘expected’ to sell properties they have developed with their own funds (akin to the Government requiring private sector bodies to sell assets)?
  3. How does this fit with the HCA’s requirement for the protection of social housing assets?
  4. If these are effectively private sales, then could they be sold on immediately to independent landlords on the RTB?
  5. Will there be any right to buy back?
  6. Will RPs be under an obligation, as they are with the RTB legislation, to point out the costs of home ownership to tenants?
  7. What will the criteria be to refuse to sell? The devil is in detail, and the final decision may rest with Boards, but it seems as though a refusal to sell must be for good reason. Will RPs get input into the guidelines?
  8. What level of assistance will RPs be expected to give to people in rural areas in finding another home to buy from that RP?
  9. How will the payment of the discount to RPs work in practice? If the Government is funding the discount; when? Will RPs get the full amount at the date of sale, rather than a tapered amount? Is there a danger here that the independence of RPs – which the voluntary arrangement is said to preserve – is still not clear, given the Government support? If the tenant sells in year 3, and the RP has had the full discount, will there be an expectation to repay a proportion of the discount?
  10. If RPs do not vote in favour next week, with no detail as to the proposal, will the Government really implement the unpopular legislation as intended, essentially holding the sector to ransom? What does the Government consider a majority? And what are the implications for RPs that vote no?
  11. How will funders and valuers view this (have they been consulted?), and how will it affect October’s FFRs? How can the expected level of sales be assessed given it’s a voluntary option? And will it have any less effect than the RTB would have, given that it still gives every tenant the right to apply to buy, although not a legislative right?

Clearly, there are many unanswered questions, but RPs will recall that voluntary sales are nothing new; this was widely used ten years ago under the voluntary sales guidance from the then Housing Corporation. However, this deal does seem like backtracking on an unpopular policy – but without backing down.

And giving RPs a week to discuss these proposals with boards and executive teams – essentially working in the dark because of the lack of detail – is hardly fair. However, it is on the face of it a better deal than previously tabled and, depending on the detail, maintains the independence of RPs.

If you would like to speak to us about any of these issues before consulting your Boards and making a decision on the proposal, or have a wider discussion about how you navigate the uncharted waters ahead, Croftons can help.

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