Following an agreement between the government and the National Housing Federation, housing association tenants in England will have the ability to buy their homes from next year. This will add a potential 1.3m new home-owners seeking mortgages in the UK, according to the department for communities and local government.
Departmental minister Greg Clark said: “Until now, Right to Buy discounts have only been available to tenants in local authority properties and some former council properties. Extending these discounts to housing association tenants in England will end this unfairness, and will deliver our manifesto commitment to extend the Right to Buy to housing association tenants.”
Under the agreement, all homes sold to tenants will be replaced on a one-for-one basis, delivering an overall increase in housing supply.
Housing associations have a strong track record in the delivery of new homes, playing a major role in exceeding the government’s 2011-15 affordable homes target by delivering nearly 186,000 homes.
Under the agreement, the government will compensate the housing association for discounts offered to tenants. The associations can reinvest home sales proceeds to deliver new supply, and will have the flexibility – although not the obligation – to replace rented homes with other tenures such as shared ownership.
The government will also implement deregulatory measures to support housing associations in their objectives to help tenants into home ownership and provide more new homes.
The same eligibility criteria and level of discount apply to housing association properties as is currently the case for council housing.
National Housing Federation chief executive David Orr said: “We made the offer on the back of sector-wide support for our proposal, which addresses our initial concerns around supply and independence.
“This new Right to Buy will help housing associations retain the independence that has allowed them to channel £76bn in private investment into home-building over the past 30 years, and see them get the full market value of homes sold – crucial for building replacements.”
Paul Lindfield, director of wealth management at Manchester-based IFA Sedulo Wealth management, said: “Looking back, Right to Buy has been a good investment overall. But the problem with the past history of this policy was that Right to Buy did not replace the housing stock sold. A lot depends on the level of discount offered. In general people in housing association properties will not usually be well-off enough to afford a deposit or to get a mortgage, so I wonder just how this will work.”