Yesterday the results came in of the #wrongtobuy adherents – Private Registered Providers aka HAs – voting to agree to a vague and unworkable proposition from their umbrella body the NHF to voluntarily operate a form of right to buy for housing association tenants.
This proposition will now be put to Government as an offer to consider.
Government can say yes or no or amend and even David Orr the CEO of the NHF has said the forced sale of council properties to recompense HA’s for the discounts given to HA tenants will require legislation. Other commentators have said much more legislation whether primary or secondary will also be needed.
No commentator has said the Government will not proceed with the right to buy for HA tenants and all take this as a given which I strongly agree with.
That right and the absolute right to buy will never be allowed to be as the Orr voluntary proposal has it which is a right to buy IF the landlord agrees. There is no way on Earth that Government will or indeed can in political terms allow such a conditional right.
You can describe RTB in anyway you choose, as an aspiration, a manifesto commitment, overt ideology or even the buying of votes, yet you cannot avoid the word RIGHT and that right has to be an absolute right not a conditional one.
The Chancellor George Osborne has publicly admitted he did not expect an outright majority at the May General Election and many said, and I believe correctly, that the announcement from Osborne of the extension of the right to buy (RTBE) was originally more posturing than definitive policy. However, the Conservatives do have a majority and the RTB is loved by the Conservatives and they cannot now backtrack or dilute the RTBE on any conditional basis.
It is either an absolute right or none at all so it has to be former, an absolute right. Yes it may include exemptions for rural properties but other than that it has to be an absolute right not a conditional one else the HA tenants denied with a diluted conditional right will make hay and see RTBE become a political and electoral liability for the Conservatives.
Within housing there has been much anger and emotive comment and I have called this proposal deluded fuckwittery and I still hold that view and still maintain that emotive term is nonetheless valid because of the proposed conditionality and proposed discretion of HA’s not to sell and many other unworkable issues such as the portable voucher element.
You can have the right to a discount but not the right to buy your own HOME is what the portable voucher proposal is and that is a ridiculous and deluded notion. The NHF proposal only sees RTBE as the right to acquire an asset and at a substantial discount and does not factor in the emotive and personal factors of a tenant wanting to buy THEIR HOME and the home they have lovingly cared for in a community they know. Yet the Orr deal proposes this portable voucher scheme after it has denied the tenant the right to buy THEIR home with the discretion they seek – which Government will and can never agree to – as it means sorry voter in London you can’t buy your home but we will give you a voucher to buy one in Redcar.
Even if such a scheme is workable and the HA landlord in Redcar agrees to sell then we see a huge perversity in that the maximum discount of £100k on a 1 bed flat in London can afford a 4 bed house in low cost Redcar or Hull or some other comparatively low cost house price area.
Yet all of the above assumes the proposal when offered will be considered by Government and that itself is politically fraught when we consider that this proposal does NOT have a ringing endorsement that many believe.
The NHF proposal said it would need a high proportion to back the proposal for it to have credibility with Government. In short that the NHF spoke for all housing associations and if the vote revealed it did not then the NHF’s ability to carry the housing association sector for a voluntary deal would have no credibility meaning any offer to Government would stand no chance.
There is both regrettably and understandably much hyperbole over the actual vote result from housing associations and the tweet below from Jon Land is typical:
The focus on the 86% and 93% is typical of the hyperbole around the result. That is explained when we see what David Orr released as the actual result below
Of all NHF members, which is not all housing associations in any case, 55% said Yes and that is no ringing endorsement or does it say to Government that the NHF speaks for and can carry the housing association sector.
The housing regulator, the HCA, say in its yearly statistical data return report published on 29 September 2015 that there are 1519 housing associations (entity level with more subsidiaries) and yet only 584 appear to be NHF members. So in numbers 321 HA’s (55% of 584) voted yes which means 1198 English HA’s did not vote for this proposal.
Just 20.26% of all English housing associations voted Yes to the Orr proposal
The NHF carried only 55% of its members in England and it does not represent HAs in Scotland for example yet we must presume the Government wish RTBE to apply in Scotland, Wales and Northern Ireland and the devolved assemblies powers do not from memory extend to blocking such a policy unlike their powers over rent setting and the 1% rent cut per year that is only for English social housing not Welsh or Scottish.
Then we see noticeable resistance if not hostility to the voluntary proposal from the National Federation of ALMOs and Association of Retained Council Housing and from Shelter and from Crisis and from the Labour Party and Labour Housing Group. All of these organisations are directly involved in any right to buy for HA tenants which begs the question could a voluntary deal ever work at all.
The ridiculously short time frame for English housing associations to respond tended to overlook the question of NHF credibility to be able to make such an offer and have credibility with Government. This 6 working day period raised emotive and polarised views and many discussions on whether legislation was needed and some of the practicalities I have outlined above as to the workings of this ‘deal’ YET it was assumed that NHF had credibility which the above discussion questions.
Many other assumptions were made about the proposal that also need much further discussion as to credibility. One was that HAs would receive full market value for each RTBE sale yet that is wholly unrealistic in economic and practical terms whilst accepting there is a strong legal position that HAs as Private Registered Providers should and may have to receive it.
The CIH gave the only estimate of RTBE numbers I have seen and this was 145,000 over this parliament. If therefore the RTBE average discount is £50,000 then HA’s would need to be paid £7.25 billion to match the £7.25 billion discount given to its tenants.
That is a huge amount of forced council house sales to recompense HA’s as the first point.
Secondly, we have an apparent ‘commitment’ that forced council house sales in the capital would be conditional on those sales going into replacements in and only in the capital. Yet in the 5 councils of Merseyside where there is no council housing how would the RTBE operate? If there is no funding to recompense RTBE sales in Merseyside then would there be any tenants able to take up this absolute right?
The Conservatives are not going to allow a diluted and conditional right of HA tenants to buy on a regional basis and deny that right to a quarter of a million HA tenants in Merseyside due to scant possibility of recompense for housing associations there. To widen that there is scant council housing right across the North West region which outside London is the largest population area for social housing and thus the largest target areas for RTBE outside the capital.
Government will not abandon hope of Conservative votes across the North West by making the right to buy conditional on FMV recompense to housing associations in the region. That is not viable politically or electorally for the Conservatives at all. So the assumption that FMV is received by housing associations is just that, an assumption, and as much as the Orr proposal suggested it was an absolute condition of any voluntary deal, it simply is not fact and can only be a mere assumption.
The Orr proposal is thus naive and as much as housing associations want to believe that FMV will happen that remains a huge assumption and nothing more than that.
The CIH estimate of 145,000 is the only one I have seen but what if 500,000 HA tenants want to exercise their absolute and unconditional right to buy? That would obviate Government finding £25 billion to recompense housing associations and we only have to look at the furore created by the £12 billion sought in cuts to ‘welfare’ as a comparison. The Government finding £25 billion through forced council sales just isn’t going to happen.
The 500,000 figure could be way too high or it could be low. Housing Associations have been falling over themselves since the RTBE was announced to say they are not aspiration deniers and in an article by Home Group it was said that surveys have shown 87% of HA tenants aspire to home ownership. Given there are 2.7 million HA properties in England alone that is 2.35 million aspiring HA tenants who want to take advantage of the no brainer financial incentives that right to buy has for each tenant household.
The early years of the original right to buy saw 200,000 council sales in 1982 alone so this 145,000 estimate over 5 years of this parliament is particularly unreliable in my view
Back in Thatcher’s first term council housing was the predominant form of social housing. Today the predominant form of social housing is housing associations with 2.7 million out of circa 4 million social housing properties, approximately 2 in every 3 social housing properties are housing association homes.
Further as anyone in housing knows the Thatcher RTB saw the best social housing properties getting sold first and those with the highest discount levels too so I think we must assume that this will happen with RTBE. We must also assume that Government want RTBE to be a huge political and electoral success and further their ‘property owning democracy’ ethos and ideology.
So how can FMV possibly happen given the costs involved as the Orr proposal assumes? It simply cannot happen and when it comes to a choice for the Conservatives of the electoral success of this policy or recompensing housing associations there can only be one winner there!
This brings me to my final point that the voluntary offer was inept. In making such an ‘offer’ the NHF have given away any ‘principled’ negotiating advantage they could have had. In the inevitable legal battle that will follow when and not if Government imposes the same right to buy for HA tenants that council tenants enjoy the legally arguable position of housing associations must be weakened by the voluntary offer.
So while the terms of the offer made such as conditionality and discretion not to sell and portable vouchers and especially FMV recompensing mean this offer will never be acceptable to Government, it will undoubtedly see primary and/or secondary legislation to impose the absolute unconditional right of HA tenants to buy and sooner rather than later and against a much weakened HA position because they volunteered this deluded and unworkable proposal.
How many HA tenants?
Government Housing Minister: 1.3m HA tenants (July 15)
The Bill includes a comprehensive range of measures to offer England’s 1.3 million housing association tenants the chance to benefit from the same opportunities council tenants enjoy, with significant discounts to buy their homes.
Government Regulator says £2.7m HA tenants (Sept 15)
Private registered providers of social housing own 2,708,611 homes, a 1.6% increase on the total for 2014, according to the HCA’s Statistical Data Return (SDR) which has been published today for the fourth consecutive year.
Government Housing Benefit data shows 1.9m HA claimants (May 15)
Many more HA tenants will not be claiming HB and the Family Resources Survey this year said 64% of HA tenants claim HB which means the 1,924,042 is 64% so 100% is 3,006,316 or just over 3 million HA tenants.
The figure must be 2.7m + yet I fail to see how 1.4m would NOT be eligible for the right to buy in the 1.3 million figure given by the Housing Minister.
Please email any other variants on HA eligible tenants to Confused@RTB.com !
The 145,000 figure over 5 years is not looking a very likely one and appears to be a very low estimate as it is just 5% of HA tenants or 1% per year.
UPDATE – Sunday 4 October The Local Government Association and the Conservative head of this says 100,000 sales over 5 years – just 0.74% of HA stock per year here – and claims that will cost local councils £6bn with average discount likely to be just over £63k. So If my view of a minimum 300,000 sales over this period is correct it becomes at least an £18 billion cost.