Posted 25.09.15
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.
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.
Posted 24.09.15
An offer tabled (today) by the National Housing Federation to introduce the Right to Buy extension voluntarily gives housing associations just one week to decide whether to support it or not.
Speaking at the National Housing Federation (NHF) Annual Conference, Communities Secretary Greg Clark set out the offer, which if supported by housing associations will voluntarily introduce the controversial RTB extension and ensure full open market compensation for the sales.
The NHF has been involved in high level talks with ministers over the summer and has now written to every association asking for a vote on whether to make the offer. Due to Parliamentary timings, associations have until 5pm of Friday 2nd October to decide whether or not to accept the NHF's proposal.
The following is the letter sent to housing associations:
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.
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.
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 for you to use and adapt for your organisation.
The offer document sets out the agreement in full and we have produced a detailed Q&A. 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 OrrChief Executive
National Housing Federation
