‘This policy is very bad news’

The number of affordable homes in Oxfordshire provided by housing associations for low-income families and individuals will shrink as a result of the Government’s “bad” Right to Buy policy, according to a major industry figure in the county.

Richard Peacock, chief executive of Soha housing, said the housing association was “totally against” the new proposal and that the policy “doesn’t help people in housing need”.

“Many people will not be able to afford it, even at this heavy discount.”

He added: “Taking away homes for social housing is bad news.”

The Government is extending the Right to Buy scheme, to apply to tenants of housing associations rather than just tenants of council housing.

Housing association tenants of at least three years’ standing now have the right to purchase their home at a hefty discount to market prices. Those who have been tenants in houses for three to five years are entitled to a 35 per cent discount, which increases by one per cent each additional year, to a maximum discount of £77,900 outside London. For tenants living in flats, the discount starts at 50 per cent, rising two per cent a year after five years.

The scheme will be funded by the new requirement for local authorities to sell their “high-value” council houses as they become vacant. The proceeds will be used to compensate the housing associations for having to sell their properties to tenants at a discount.

Mr Peacock said the policy was flawed on a number of levels. He said most housing association tenants did not have the money to buy their own homes outright, as about half of Soha’s tenants relied on housing benefits.

Soha, which owns more than 6,000 properties in South Oxfordshire, Oxford and Swindon, estimates it would initially be forced to sell between 50 and 100 properties a year under the new scheme, but that number would dwindle over time.

However, Soha’s declining asset base meant it would be more difficult for the housing association to secure mortgages to build new homes. Soha builds about 300 new homes a year, a third of which are part-owned by tenants. “We borrow against our existing stock to provide new homes.”

He criticised the Government for compelling housing associations, which, like Soha, are mostly charities, to offload their properties. “A key problem with this proposal is that it forces independent charities to sell off their assets. That is a really bad move.”

The Financial Times columnist Martin Wolf described the scheme as “nothing less than the expropriation of private property”.

Andrew Smith, the Labour MP for Oxford East, agreed. “This policy is very bad news for housing associations and those in need of their accommodation,” said Mr Smith. “They are independent organisations and it is draconian for the Government to be forcing sales upon them, which will hit their asset base, thereby reducing the capital they have as security for borrowing to build new homes. Taken together with the shortage of land for housing in Oxford, it’s very difficult to see how the sales could be made up by new build, cutting the social housing for rent in our city.”

Soha’s Mr Peacock is also sceptical about the funding mechanism. He said it was doubtful that Oxford City Council, which is the only local authority in Oxfordshire that owns council housing, could raise enough money through selling homes in order to fully compensate the local housing associations.

“Our concern is that the promise of one-to-one replacement is difficult.”

The Oxford Mail, the sister paper of The Oxford Times, reported earlier this week that senior Oxford City Council staff were worried that there was no guarantee money raised through the sale of council homes in Oxford would be reinvested in housing association homes in the city.

However, Housing Minister Brandon Lewis said: “It is important that councils make the best use of their assets and manage their housing stock as efficiently as possible. So it is right that as high-value council homes become empty they should be sold to fund new affordable house-building in the same area.

“The proposals in the Queen’s Speech will do that and more, extending Right to Buy level discounts to over a million housing association tenants, with the homes sold replaced with new affordable homes.

“This is part of our wider efforts to help anyone who works hard and wants to own their own home achieve their dream, with over 200,000 households helped into home ownership through Government schemes since 2010.”