House Building Must Grow Fivefold to Meet Right to Buy Promise, Warns NAO

House building to replace homes sold through the Right to Buy scheme must grow fivefold to meet the Government’s one-for-one promise, MPs have been warned.

The National Audit Office (NAO) also explains that the Government pledge to replace homes sold through the scheme “does not necessarily mean like-for-like”. It says that replacement properties can be “a different size, and built in a different area, compared to those that have been sold”.

House Building Must Grow Fivefold to Meet Right to Buy Promise, Warns NAO

The warnings are included in an NAO report prepared for the Public Accounts Committee (PAC). MPs on the committee are analysing what impact the Housing and Planning Bill will have and whether it will achieve value for money.

The bill, currently going through the House of Lords, plans to give 1.3m housing association tenants the right to buy their homes at discounted prices. The extension of the current scheme would be financed through the sale of high value council homes when they become vacant.

The Government has also vowed to replace each home sold by housing associations, as well as additional properties for those sold by councils, with at least two additional affordable homes for each one sold in London, where there is a chronic shortage of housing. Councils will have three years to replace homes sold to fund the scheme.

However, the NAO report warns MPs that the “pace of replacement will also need to accelerate to keep pace with the target in subsequent years”.

It states: “To meet the target of replacing the roughly 8,512 homes sold in 2014/15 by the end of 2017/18… would require quarterly housing starts to reach around 2,130, a fivefold increase on recent figures of approximately 420 per quarter.”

The NAO also criticises the Department for Communities and Local Government’s (DCLG) assessment of the impact of the policy. It claims the DCLG assessment, “when reviewed against good practice… has weaknesses”.

The NAO says that the DCLG’s assessment fails to give alternative options for achieving its aims, or a summary of other options considered at an earlier stage. It adds that while it identifies a number of groups that may be affected by the bill, “it does not seek to quantify the costs or benefits, and it omits some potential impacts”.

The NAO concludes: “Additionally, though dependent on certain assumptions, the impact assessment does not state those assumptions clearly, use evidence to justify them, or sensitivity analysis to consider the potential impact of uncertainties relating to them.”¹

The Government has confirmed that secondary legislation will define what high value is when determining how much each council will pay to fund the sale of housing association homes.

The extension of the Right to Buy scheme to housing association tenants has been continuously criticised. Many believe that it will restrict the availability of affordable housing.

Also, it was recently claimed that many homes sold through the current Right to Buy scheme for council tenants are now being rented out by private landlords.

^{1 https://www.nao.org.uk/wp-content/uploads/2016/03/Memorandum-extending-the-right-to-buy.pdf}