Simple Maths – the answer to Greg Clark and the Housing Association Right to Buy

In announcing the Government’s new housing association Right to Buy (RTB) policy on the Today programme this morning, Greg Clark left an obvious gap in the Government’s proposals that was left unchallenged in the interview. This needs to be fully tested to see whether there is yet another reason for why extending the RTB to housing associations could be such a disastrous policy.

The justification Greg Clark gave for extending the RTB to housing association tenants was to enable them to meet their aspirations to own their homes. He considered that housing associations should not object to these proposals because of the Government promise that the homes sold would be replaced on a one-for-one basis – and this is an important part of the proposed policy.  Who is to provide this compensation?  The answer he gave is that local authorities are to repay housing associations for the loss by them selling their own, higher valued properties.

Putting aside the results of the research that only 1 in 19 RTB properties have previously been replaced under the current RTB arrangements and only 39% of housing association tenants themselves think they should get a discount, the simple maths does not work. In order for a housing association to be compensated for the sale of one of its properties, local authorities must themselves sell one of their higher valued properties.  This means the RTB property is now in private ownership and a local authority property has to be sold in order to build a replacement one for the housing association – one minus two still equals minus one.

There could also be a perverse incentive on local authorities to review their direct ownership of social housing if, for example, Westminster Council is required to sell one of its properties to compensate Peabody for the sale of one of its own properties under the housing association RTB. How this compensation will practically work across the country when so many local authorities have transferred all their housing stock and the national HRA has been disbanded is another headache. This may even result in some local authorities dusting off their old stock options appraisals and pursuing a whole stock transfer simply to halt the enforced sale of their housing stock.

These arguments need to be properly and comprehensively aired beyond political and philosophical positioning in order to balance the equation.

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