Housing associations have one week to decide on a unprecedented offer from government to introduce the Right to Buy extension voluntarily says Inside Housing today
“Communities secretary Greg Clark today set out an ‘offer’ to housing associations to voluntarily introduce the controversial extension, which will ensure full open market compensation for the sales.
The National Housing Federation (NHF), which thrashed out the deal with ministers in top level negotiations over the summer, has written to every association asking for a vote on whether to accept the offer.
But due to parliamentary timings, landlords have until 5pm next Friday to decide whether or not to accept the offer.
Speaking after the minister at the National Housing Federation’s conference in Birmingham, David Orr, chief executive of the NHF, said: “This is… a defining moment in our relationship with government.”
The deal would mean the government would not include the Right to Buy extension in the forthcoming Housing Bill, instead relying on the voluntary agreement of the sector.
Mr Clark said the “presumption” under the deal would be that every tenant would have the opportunity to buy the home they live in.
Although, in some circumstances – such as specialist supported accommodation and rural housing – the association would be free to offer another property for sale, with an equivalent discount offered.
Housing associations would receive full compensation for homes sold sale, equivalent to the open market value of the home.
However, Mr Clark did not explain how the discounts would be funded and said nothing to rule out the forced sale of high value council homes to provide the cash as originally proposed by the government.
The minister said he wanted replacement homes to be built “as quickly as possible” and suggested a two-year time frame, in contrast to the three years currently provided to councils.
Where a housing association does not build sold homes, the NHF would step in to match the funding to a developing housing association.
Mr Clark also said he wants to “work with the sector” to find a way for every tenant to buy a stake in their home which increases over time.
In order for the Right to Buy proposals to be dropped from the bill however, the sector must return a form to the NHF by next Friday, Mr Orr explained.
“We have to give government a clear mandate to remove the clauses before the bill is published… I’m talking about an ambition for the next 30 years which probably depends on what you decide in the next eight days,” he said.
It is not clear what would happen should a percentage of landlords vote against the bill, how many votes the NHF feels are necessary to represent a mandate or if councils will be given a vote.
Mr Clark told the conference: “I’ll be completely candid, there are some who say that to achieve the transformation we need requires a fresh start – that the housing association sector has taken us so far but might not be the right partner for the future.
“But there is another view: that this is a sector that has scored big successes. That can be agile and adaptable to the changing opportunities and requirements of our nation. A sector that has always been respectful of the mandate of each government.
“Two contrasting views – be content with the achievements of the past or look to build and to own a new future. The choice between them will determine the very future of the sector.”
The initial reaction of delegates at the conference to the deal was positive. Geraldine Howley, chief executive of Incommunities said she had already signed up to the deal. She said: ‘This sounds like the best way to make it work.’
Matthew Harrison, chief executive of Great Places, said: ‘There will be some devil in the detail but the protection of our independence is really important – we will recommend this to our board for approval.
Find below the letter sent to housing associations.
Dear XXX
Today, following intensive negotiations with the government and discussion with members, we have made a formal offer to the government that sets out an alternative way for the housing association sector to deliver the extended Right to Buy. This offer was welcomed by the secretary of state Greg Clark this afternoon in his address at our Annual Conference.
First, let me say that I know how profoundly the collective recent announcements from the government, including the extension of Right to Buy, will impact your businesses. We are committed to working with you up and down the country to face them head on. I also know that this offer, if implemented, will present challenges for a great many of your businesses. I am confident, however, that under this offer those challenges will be far more manageable than those you would face otherwise.
We believe that the offer would work for the sector on three vitally important fronts. As crafted, it would:
- Preserve the independence of boards to make decisions – an independence that would be undermined by a compulsion to sell
- Establish a positive, constructive new relationship with the government that positions us as trusted partners in delivery rather than a sector to be controlled with imposed solutions
- Secure the best achievable deal for the sector in terms of compensation and flexibility. Housing associations will get the full market value of the homes they sell, and they will also have flexibility over which homes they sell, though there will be a clear presumption to sell, and how and where they replace them.
These three factors – independence, a new relationship with the government, and the best deal on compensation and flexibilities – will help to ensure that you and your board retain the freedom to make your own future and choices. We believe that this offer is the very best possible compromise achievable for the sector.
Key elements of the proposal
The offer we have made differs significantly from the government’s initial proposal, allowing the government to meet its manifesto commitment while providing important protection for housing associations’ businesses.
The key points are as follows:
- You will get the full market value of the properties sold, including repayment for the discount the tenant receives.
- You will maintain your independence with control over which individual homes you sell, establishing an important principle and reducing the risk of reclassification of housing associations as public sector, with the implications for your future as an independent business that this would entail.
- In most circumstances, you will be expected to sell the tenant their current home. However, if you have a good reason not to, you can work with the tenant to find an alternative home. The final decision about whether to sell an individual home to a tenant will rest with your board.
- There are some circumstances, such as in rural areas or with certain types of homes, where it will be made clear to the tenant that they shouldn’t expect to be able to buy their current home, and you will work with them to find them somewhere else to buy with their discount should they choose to do so.
- There will be a national commitment to replace each home sold on a one for one basis, but the type and location of replacement is flexible – you can build a new one for social or affordable rent or shared ownership, or, in certain limited circumstances, you can buy one on the open market or bring an empty home back into use. The replacement home does not need to be in the same area as the home you sold.
You can read the full details in the formal offer document which you can download here.
Securing a deal – next steps
The offer as written has been welcomed in principle by the government, following extensive discussions. It will, not, however, be accepted as an alternative to compulsory legislation unless we can demonstrate that it has the overwhelming support of the sector.
The legislative timetable means that the timings for this sign up process are very tight. The government has had to set a deadline of Friday 2 October to ensure that the deal can be agreed before the Housing Bill is published later in October. If we do not meet that deadline, then the government will proceed with legislation as planned to extend the Right to Buy to housing associations.
It is therefore essential that the sector acts quickly to show its intent. We are asking each organisation to formally confirm that they sign up to the offer by signing this pro forma document, drawn up in partnership with CLG, and returning it to us by fax or as a scanned document over email.
Many organisations have already told us that they support the proposal in principle and will be ready to formally sign up. However, we know that other organisations will want to discuss this urgently with their board before signing up. To assist this conversation, we’ve put together a sample board paper:
http://nationalhousingfederation.newsweaver.com/5awtwdxmqxa1pl98004stu?email=true&a=6&p=49257601&t=28612278
…for you to use and adapt for your organisation.
The offer document:
http://nationalhousingfederation.newsweaver.com/40v0nttyeux1pl98004stuemail=true&i=2&a=6&p=49257601&t=28612278
sets out the agreement in full and we have produced a detailed
http://nationalhousingfederation.newsweaver.com/18fa4qltsg71pl98004stuemail=true&a=6&p=49257601&t=28612278
Should you have any further questions, please do get in touch with us as soon as possible via righttobuy@housing.org.uk> and one of our team will come back to you.
For the avoidance of doubt, we wish to make it clear that although the Federation has negotiated this deal, it is up to individual boards to decide.
I would urge you to consider the crucial importance of this deal to the sector’s long-term future and take whatever steps you can to add your organisation’s name to it before the deadline of 2 October.
Yours sincerely,
David Orr
Chief Executive
National Housing Federation”