Housing (Right to Buy) (Limits on Discount) (England) Order 2024

Motion to Regret

17:36:00

Moved by

That this House regrets that the Housing (Right to Buy) (Limits on Discount) (England) Order 2024 (SI 2024/1073), laid before the House on 30 October, will reduce the number of social tenants who can purchase their property, undermine home ownership and cut new house building. Relevant document: 7th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).

My Lords, this statutory instrument will reduce the number of qualifying secure tenants who have the opportunity to buy their rented home at a discount. This will reverse our record in the period 2012 to 2024, which enabled almost 160,000 sales under the right-to-buy scheme. On our watch, the right-to-buy discount was incrementally increased. In 2012, the maximum cash discount went up significantly from regional levels of between £16,000 and £38,000 to a new national level of £75,000. In 2013, the maximum was propelled further in London to £100,000, and from 2014 the maximum discounts rose annually, in line with the percentage change in the consumer prices index. The current maximum discounts available are £136,400 in London and £102,400 outside London. Our aim is to move towards a scenario where people own their own home and are less reliant on local authorities. Being able to buy your own home is a critical feature of social mobility. It allows people to acquire an asset which translates into wealth, which can then be passed on to the next generation, which in turn gives more opportunities in life. The Government have cut the maximum discount to between £16,000 and £38,000, which means that secure tenants of local authorities who want to buy their home will have to pay materially more for their property. The Ministry of Housing, Communities and Local Government has released a policy paper on the review of the right-to-buy discounts which showed that sales will be reduced by 25,000 over five years. By the department’s modelling, under the previous Government’s rules 35,000 people would be able to buy their social housing by 2029, but under this Government’s new rules that figure would only be 8,500. That means that 26,500 people will potentially miss out. The Government’s own modelling has shown that there would be 7,000 sales annually to 2031 if our rules were kept. However, that number will shrink to 1,700 per year under this Administration’s new rules. That means an average of 5,300 people per year will not be able to buy their home under the new restrictions. The Government are clearly looking to create an environment where the local authorities are able to channel a larger proportion of receipts from social housing sales into building new social housing. In July 2024, the Government increased the flexibility on how councils can use their right-to-buy receipts to accelerate the delivery of replacement homes. The caps on the percentage of replacements delivered as acquisitions, and the percentage cost of a replacement home that can be funded using right-to-buy receipts, have been removed. Local authorities can now combine right-to-buy receipts with Section 106 contributions. We understand that these flexibilities will be in place until the end of 2026, subject to a review. Furthermore, the Government in the Autumn Budget stated that councils will no longer be required to return a proportion of the capital receipts generated by the sale of the home to His Majesty’s Treasury. We appreciate that the Government are looking for ways to build more affordable housing. However, we do not think that this should be achieved at the expense of aspiring home owners who are saving to purchase the home they have lived in for, in many cases, a considerable amount of time. The Government believe that fewer social houses in local authorities is indicative of a problem. We would argue that creating a system that results in an ever-increasing number of social homes on the local authorities’ books is unsustainable. To clarify, we absolutely must make provision for the most economically vulnerable and in need, so that come rain or shine they have a roof over their heads. But the endgame should be to help people stand on their own two feet, independent in their own home, which they themselves have purchased. I beg to move.

My Lords, I declare that I am a vice-president of the Local Government Association. Back in 1980, when the right to buy was brought in, I was in favour of it in principle, because it devolved power and responsibility from the state to the individual. It seemed to me that it would lead to greater investment in homes if more private cash was spent on upgrading the country’s housing stock. I did not support selling off social housing without any replacement, always urging for one-for-one one replacement. But that never happened, and worse, around 40% of those homes sold ended up in the private rented sector, with higher rents pushing up the housing benefit bill. Paragraph 5.5 of the Explanatory Memorandum is very clear in its explanation of this statutory instrument. It says: “The Government’s objective is a fair and sustainable right to buy scheme that protects existing social housing stock whilst ensuring that secure tenants who have lived in, and paid rent on their homes for many years, retain the opportunity to own their home. This statutory instrument will directly support that objective”. The two key words seem to me to be “fair” and “sustainable”. It is fair that those who have paid rent for many years should be able to benefit from their rent being seen as a form of deposit, and this statutory instrument will still enable them to do so. Back in 1980, it was only fair that council tenants of long standing should not be excluded from the benefits of inflation on the capital asset they were renting. But the situation is very different today. Discounts have got bigger. Housing for social rent has been neglected. There is a massive affordability crisis in buying a home for those on lower incomes as prices have continued to rise steeply. Yet rented housing—private or public—is nowhere near enough to meet demand from those unable to buy, and more people than ever are homeless. It is inappropriate to allow the current right-to-buy system to continue without amendment. Indeed, in Scotland and Wales, right to buy has been scrapped altogether. That is not what the Government are doing in England. They are cancelling the possibility of extending the right to buy to housing association tenants, but the right to acquire, which has a lower level of benefit, will continue to be available.

17:45:00

It is true that the Government are reducing the levels of discounts and extending the qualifying period to 10 years as a tenant from a minimum of three now, and avoiding financial loss where a property has received investment prior to sale. As the Deputy Prime Minister has said,

“we are losing more social homes than we can build, at huge cost to families, to taxpayers, and to communities”.

That is undeniably true, and the aim of this SI is to do something about it—and we need to do something about it, with 1.2 million households on council waiting lists.

The noble Earl, Lord Effingham, in winding up the debate on housing supply and homelessness last Thursday for the Conservative Benches, said:

“Homelessness should have no place in this country”.

He also said:

“Everyone wants to end homelessness”.—[Official Report, 5/12/24; cols. 1340, 1342.]

That is quite a comment on the record of his party in government in recent years. Homelessness indeed should have no place in this country and the level of homelessness is very troubling. There are 123,000 households and 159,000 children in temporary accommodation. Council spending on temporary accommodation reached £2.29 billion last year, which the National Audit Office said recently is “unsustainable”—it is unsustainable.

Homelessness cannot be solved without having more social homes for rent. Is this statutory instrument fair? Is it in the public interest? Does it strike a balance between the needs of the taxpayer not to lose money, and to get a fair price for a property, and the wishes of the tenant? I think it is fair and I have concluded that it strikes the right balance. I find it very puzzling that the Conservative Opposition in this Chamber can now happily say that it is right knowingly to sell off social housing when, in the period of their Government from 2015, they did not replace social housing adequately.

We have a housing crisis and the Government have to do something about it. They will, in the course of time, review the decision they are making on this SI. However, I wish to make it absolutely clear that my party is very supportive of this SI as an essential step in producing enough social housing for rent.

My Lords, until May, I was the leader of a council for 17 years. Under my leadership, every single home lost to right to buy was replaced, and then some. We delivered 1% of the entire national affordable housing stock each year through the 2010s. That needs an authority that is organised and ambitious, and a clear idea of what the state is for. Did we sit there moaning about right to buy? No, we did not; we just got on with it. We struck hard bargains with landowners and developers. We recycled capital receipts. We built new homes for rent, of different tenures and different types, in both towns and villages, but mainly for social rent. That income kept council tax down for everyone. It can be done. Throughout the 2010s, it helped that there was a 25% new homes bonus kicker for the delivery of new homes under social rent. It certainly helped when the last Government changed the rules so that we got to keep all the money to reinvest in new homes rather than see it go to the Treasury, particularly for temporary and short-term accommodation, where the need has become suddenly greater following Covid. I can tolerate restrictions on right to buy on brand new homes, but I cannot abide those who stand in the way of a family cherishing an older property that could be brought into their ownership, the money for which would allow a new, much more modern and cheaper to run home to be built. For too long, blaming right to buy has been an excuse for inaction on house- building by councils. It has been a case of blaming the Government rather than rolling up your sleeves. I am disappointed that the Government are diluting the incentive for families to take the plunge to seek more security and a stake in society. I particularly regret that the statutory instruments committee had to drag the full extent of these regressive proposals out of the Government, who either had not shown or did not want to show how many families would be disadvantaged by this proposal. This is a moment to realise that right to buy has been one of this country’s most transformative policies and has done more to drive social mobility and give families a stake in society. That is something everyone in public life should aspire to promote, but perhaps that is asking too much from a Government who are putting limits on aspiration in so many walks of life, not driving it forward.

I rise briefly to take part in this debate. Before doing so, I draw Members’ attention to my register of interest: I am a vice-president of the Local Government Association and a director of a fully privately funded affordable housing provider that actively encourages its tenants to buy their homes after five, 10, 15 or 20 years. It is called Rentplus and it does what it says on the tin: you rent at a discounted price and you buy at a discounted price. I work for somebody in the private sector who preaches the possibility that home ownership should be within everybody’s reach. I will support my noble friend by going through the Division Lobby with him when he chooses to divide, but I will not agree on the reason. My reason is not that the Government are being unreasonable in setting the numbers they have chosen. Putting numbers on a piece of paper is a big mistake when talking about property markets; they are so varied in so many places for so many different reasons that it is better to put a percentage figure. I disagreed with what the last Government did by increasing the discounts to such a level that only really rewarded avaricious grandchildren, not the hard-working tenants who had occupied their homes for a long time. A number of elderly people were pressured into buying their houses for a capital sum that would go to their grandchildren. That should not have happened unless that grandchild had lived with those grandparents. But, as my noble friend Lord Fuller said, right to buy is probably the single biggest piece of social mobility legislation enacted since the war. It enabled a million families to gain access to capital who never had done in the history of their families. I do not think anybody has done any work, but somebody should do, on how many businesses were set up in this country by people who could leverage capital they had not previously had access to. For a number of reasons—I think about our care sector, as people need access to capital to be able to pay to have care nowadays—this country would fall apart without it. We should not lose sight of the fact that just over a million homes were lost to councils through right to buy, but 2 million homes were lost to councils through propositions put forward by the Tony Blair Government. Out of the 4 million homes that used to be in council ownership pre-1980, 1 million, so 25%, were lost through right to buy and 2 million—50%—were lost through LSVT. Councils such as my own were summoned to the Government Offices for the Regions to explain why they were not transferring their homes out. So this is not a tribal issue between the red team and the blue team; it is a proposition about whether we believe most people in this country aspire to be home owners. Clearly we do—I think all of us across the Chamber believe that—but do we also believe that people should be able to live in a safe, secure, decent, affordable home even if their financial circumstances mean that they are unable to do that completely unaided at the time they need it? Right to buy is a good thing, but the right to build is the most important thing, and I agree that the Labour Government are right this time round to allow councils to keep 100% of the receipts, which would otherwise have been lost to the Treasury. Who wants to give money to the Treasury? It is much better for it to be spent locally. If the Labour Government had said that the discounts would be set at a local level by local councils to stimulate demand but not to reward avaricious grandchildren, I would not be going through the Division Lobbies tonight. But that is not what they have said; they have said, “Whitehall knows best. We’ll set an arbitrary figure that’ll have no bearing to the marketplace in a year or two’s time”.

My Lords, I draw Members’ attention to my interests as detailed in the register, including being a councillor in Central Bedfordshire, which has its own housing HRA. I very much support my noble friends’ comments regarding the opportunities that right to buy has given to so many people, but I will highlight the fact that this is an issue not of the sale of council homes but of a complete failure to build. There are 4.25 million affordable homes—an increase of some 35,000 over the last two years, even with the sale of around 30,000 affordable homes in that period. I am pleased that the last Government had the 100% retention of right-to-buy receipts, which facilitated councils building homes. If we are to build the homes that we need, it is essential to maximise all avenues to building more homes. Allowing tenants to buy their own homes with a reasonable incentive and reinvesting the proceeds in new homes is an opportunity for more, not fewer, homes. I will give the example of my own council, and I will trump my noble friend Lord Fuller because Central Bedfordshire was at 1.5%, not 1%. I am proud that, as leader of Central Beds, we had a proactive council house building programme. For example, in the period 2021-23 we built 259 homes and acquired a further 76, and we sold 82 under the right-to-buy rules —a net increase of 253. Without the proceeds from right to buy we would have ended up building substantially fewer homes. That would have meant tens of families—possibly even 100—not having a home because we would not have had the right-to-buy proceeds. That is important, because it gives more people the opportunity for an affordable rented home. I reiterate: the ability to reinvest proceeds from right to buy is an opportunity to provide more, not fewer, homes. The issue is one of getting homes built, which should be the focus, not curtailing opportunity.

My Lords, from listening to this debate, I recognise that there is a certain amount of agreement around the Chamber. It seems, as we heard from the noble Lord, Lord Porter, that this is very much a question of balance. Of course right to buy was a wonderful thing for many people, but the right to have a roof over your head is also pretty important. Therefore, if you take it too far and there are no council houses to put vulnerable people into, you will have a real problem. It seems there is a consensus that could lead to the right way forward—namely, the right amount of houses being available for right to buy but preserving enough and, as has been said, building more to protect fragile communities.

My Lords, I thank the noble Earl for bringing this debate. We are in the middle of the most acute housing crisis in living memory. Too many are left without access to a safe and secure home. To the noble Lords who have been leaders of councils, I say: so have I. For many years as a council leader, I struggled really hard to persuade our treasurer to find the funds to build homes, only to see them sold for less than it cost us to build them. That is why the Government are committed to working with councils and other providers of social housing to deliver the biggest increase in social and affordable housing in a generation. We have heard much about aspiration. For the over a million people sitting on those waiting lists for a long time and the 117,000 families in temporary and emergency accommodation, social housing is their aspiration. Our job as a Government is to get the balance right between offering homes for sale and retaining stock for social rent. That balance is critical to solving our housing crisis.

18:00:00

In the Budget, we set out a series of measures to support social housing providers to increase their capacity, confidence and motivation to invest in new and existing homes. We are providing £450 million to councils to house some of the most vulnerable in society, as well as injecting £500 million into the affordable homes programme; we are helping councils to borrow more cheaply from the Public Works Loan Board until the end of 2025-26; and we are consulting on a new five-year social rent settlement, which would allow rents to increase to provide the certainty that social housing providers need to plan for the long term.

However, we cannot achieve our ambitions while councils are losing homes quicker than they can replace them through the right-to-buy scheme. As noble Lords have said, right to buy has supported social tenants to own their homes. It boosts opportunities for families across the country who may not otherwise have been able to access home ownership. We are committed to the right-to-buy scheme.

However, the scheme must be reformed in order to better protect the existing stock of social rented homes, provide better value for money for the taxpayer and ensure fairness within the system. Between April 2012 and March 2024, there were over 124,000 council right-to-buy sales. In the same period, fewer than 48,000 homes were replaced. At the same time, demand for social housing has grown, with nearly 1.3 million people on the waiting list, as I have said, and 117,000 households, including 150,000 children, in temporary accommodation, as mentioned by the noble Lord, Lord Shipley.

The failure to replace those homes that have been sold is a contributor to the urgent and rising need for social rent homes in most communities across the country. The cost of this has been borne not only by those low-income families unable to secure a social home but by the taxpayer, in the form of a rapidly rising housing benefit bill. This is unsustainable and represents poor use of public money.

The Government therefore acted on the commitment in our manifesto and reviewed the increased right-to-buy discounts introduced in April 2012. This review concluded that the increased discounts had had a negative impact on social housing stock. If maximum discounts had been kept at previous levels, we estimate that there would be an average of 7,000 sales annually, with only around 3,000 to 4,000 replacements. This would not support the Government’s objective to deliver a fair and sustainable scheme and to protect existing social housing stock.

As a result, the Government brought forward the secondary legislation that we are debating today to return the maximum right-to-buy cash discounts to pre-2012 levels. Discounts now range from £16,000 to £38,000, depending on where a tenant lives. Reduced discounts will better protect council housing stock to meet future housing needs and better enable councils to replace the homes sold. An estimated 25,000 homes will stay within the social rented sector over five years, meaning the sector will be larger as a result. Where homes are sold, councils will retain a larger portion of the receipt to build and acquire new homes. Social tenants—an estimated 1,700 a year—will still be able to buy their own home.

At the same time, we have increased the cost floor period from 15 years to 30 years to better protect council investment in building or maintaining properties. This will give councils greater confidence to scale up delivery of social homes for those who need them most.

In the Budget, we also confirmed that councils will no longer be required to return a portion of the capital receipt generated by a right-to-buy sale to the Treasury. I will not comment on giving money back to the Treasury, as the noble Lord, Lord Porter, did, but I think this money is better suited to being in local areas to build housing. This is in addition to the increased flexibilities in how councils can spend the receipts, which we announced in July. These changes will better support councils to build and acquire new council homes to meet local housing need.

Finally, we launched a consultation on 20 November on wider reforms to the right-to-buy scheme. We are seeking views on eligibility criteria, further protection for new-build properties and how best to support councils to replace homes sold.

I turn now to some of the questions that noble Lords asked. I thank the noble Lords, Lord Fuller, Lord Porter and Lord Jamieson, for setting out their plan for building more homes in their local areas. I have seen what they have been doing; we did the same in my local authority. But it has not been easy and, hopefully, these measures will make it easier.

The noble Lord, Lord Fuller, spoke about the impact of right-to-buy discounts. As the noble Lord, Lord Shipley, said, we are not removing the right to buy but just changing some of the provisions. We want long-standing council tenants to be able to buy their home, but this must be balanced against the need to protect our social housing stock for those who need it most. The noble Lord, Lord Fuller, spoke about when the statutory instrument was introduced. We did publish a detailed review document alongside that, which set out the impact on council stock of the increased discounts introduced in 2012 and the impact on sales of reducing discounts.

Following comments from the Secondary Legislation Scrutiny Committee, which we always welcome, we have updated the Explanatory Memorandum to include a link to the review document, as well as the headline impact of the reduced discounts on sales.

On the discount levels mentioned by the noble Lord, Lord Shipley, the Government have reviewed the increased discounts introduced in 2012. We concluded —as he suggested—that the impact on council stock has been too high. Returning to pre-2012 levels of maximum discounts will ensure the scheme is fairer and more sustainable, while supporting a reasonable proportion of tenants to still be able to buy their property.

The noble Lord, Lord Porter, mentioned the LSVT transfers. He is correct but, of course, many of those homes were still for rent and were retained in the rental stream, albeit in a different form from the council housing.

The noble Earl, Lord Effingham, spoke about helping social tenants into home ownership. We made it clear in our manifesto that we would be reviewing the increased discounts introduced in 2012, and highlighted this in our housing statement in July. Tenants were given three weeks to make an application before these new discounts came into force.

As regards replacement stock, the noble Lord, Lord Shipley, was right to say that, when this whole scheme was introduced way back in the 1980s, it was always intended that there would be one-for-one replacement. However, there never has been one-to-one replacement; in my view, that has been the major flaw in the whole scheme.

The noble Lord, Lord Porter, referred to the flexibility in using receipts. I am pleased that we are allowing councils to keep 100% of the receipts generated by right-to-buy sales. That has totalled around £183 million a year. Coupled with the increased flexibilities in how councils can use receipts, announced in July, this will help accelerate and increase the delivery of replacement homes.

As I have said, it was always the intention that right to buy would involve one-for-one replacement. Now, we need to introduce new reforms to help that along. These are the right reforms that the country so desperately needs. The Government will keep discount levels under review to ensure that the right balance between protecting social housing stock and enabling tenants to access home ownership is being struck.

We had an extensive debate on housing in your Lordships’ House just last Thursday, when there was broad agreement across the House that we needed a generational change in the delivery of housing to meet the aspirations of a generation that has been locked out of housing. For some, that aspiration is owning your own home; for them, we will be introducing a mortgage guarantee scheme. For many others, that aspiration is secure social housing. Our Government are focused on both.

My Lords, I want to thank all noble Lords who have contributed to this debate, as well as the Minister for her feedback. As she mentioned, just three business days ago, we debated housing supply and homelessness in your Lordships’ House. Please let me briefly flag some valuable and relevant contributions from that debate. The noble Baroness, Lady Smith of Llanfaes, said that young people tell her that “they fear they will never own their own home”.—[Official Report, 5/12/24; col. 1330.] The noble Lord, Lord Snape, added that “it is unfair, particularly on the younger generation, that house ownership has become so difficult”.—[Official Report, 5/12/24; col. 1336.] I agree with the noble Baroness, Lady Smith, and the noble Lord, Lord Snape. I believe that this SI makes it much more challenging for everyone, both young and old, to get on the housing ladder and benefit from property ownership, creating not a house but a home that is their own. On that, I would like to test the opinion of the House.

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