Right to Buy Replacement Part 2: a simple test to tell if replacement is real

This is the second of two posts about replacing homes that are sold through Right to Buy. The first part looked at the shortcomings of the existing replacement scheme. This part looks at what a good replacement scheme would look like.

The weakness of the existing Right to Buy replacement scheme does not mean that the principle of selling social rented homes and replacing them is a bad one. Managing a stock of social rent homes judiciously can mean that you’re able to make more affordable homes available to more people who need them. For example, I don’t think the decision to sell a £3 million council home in order to build 20 more low rent homes in the same local authority was a bad one. And the principle of helping a relatively wealthy social renter into home ownership if it means you’re able to free up a social rented home sounds reasonable too.

The success or failure of any replacement scheme is going to lie in exactly how it’s structured. But I reckon that there’s a pretty simple test to tell whether any commitment to replace Right to Buy homes is real and it’s this:

Is the household that would have otherwise been able to move into the existing social rented home – the one that’s been sold – reasonably going to be able to move into the replacement home?

This hypothetical test rests on the principle that when a social rented home is sold off and not replaced then a real family on the local housing waiting list that needs a social rented home loses out. Because if the home hadn’t been sold they would have been able to move into it.

Whether that household could reasonably expect to be able to move into the replacement home will itself depend on four considerations:

  1. Time – the new home must be built within a reasonable waiting time. A home that is built ten years after another is sold isn’t a real replacement under this test, because you couldn’t expect a family to hang around for another decade. Even three years sounds unreasonable, particularly given most will have been waiting for some time already. Ideal replacement would take place so that the new home was available to move into as soon as the other is sold. You’d have to do this by pump priming replacements – funding them up-front in anticipation of future sales.
  2. Location – the replacement must be in a place that the family is going to be able to access. Under the existing scheme replacement homes can be built anywhere in the country, regardless of where the original was sold. In many cases, this will mean that the family that lost out isn’t even eligible to live in the new home. But it’s not only about eligibility, it also isn’t reasonable to only offer a family a home in a place where they’d be forced to change jobs and move their child’s school or spend vast amounts of money or time commuting.
  3. Size and type – the replacement has to be the right type of home to be accessible to the same household. If the home that’s sold was a three bed family home and the ‘replacement’ is a studio, then it isn’t a real replacement. If a disabled accessible bungalow is sold, then the replacement also needs to be disabled accessible.
  4. Affordability – the replacement home has to be affordable to the household that’s lost out. The existing replacement scheme takes social rented homes (usually around 50% market rents) and replaces them with Affordable Rent homes (up to 80% market rent). Given that the new benefit cap is going to make many family sized Affordable Rent homes in places like London unaffordable even for people on housing benefit, then this isn’t genuine replacement. Likewise, most people who are waiting for a social rented home couldn’t afford to buy a shared ownership home – so building new shared ownership homes does not replace social rent council homes.

This is real replacement: a new home to replace the old one that’s built reasonably quickly, in a similar location, is a suitable size and is as affordable to live in. There will always be exceptions – but this should be the rule.

As things stand, the government could claim to meet its replacement pledge by replacing a four bed, social rented home in inner London, with a shared ownership studio flat in Newcastle – ten years later. And that’s no replacement at all.

One Comment
  1. “This hypothetical test rests on the principle that when a social rented home is sold off and not replaced then a real family on the local housing waiting list that needs a social rented home loses out.”

    If a housing association tenant buys their home in their 40s and lives up until they are 80. Their house will not be available for the next 40 years. I am not sure what difference it makes to someone waiting on the housing waiting list?.

    I have noted some wealthy individuals such as the late Bob Crow earned £100,000 and lived in a housing association home. There is something wrong with the system, if well off people can earn such sums, yet pay a lot less rent then a private tenants earning significantly less.

    Those tenants who buy their housing association homes are a getting a windfall from the state. Many housing association received subsidies of a £100,000 per property. It is unclear what discounts the tenants will receive e.g. £50,000, £100,000, £200,000 etc…

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