The Government has announced some time-limited flexibilities for local authorities in relation to their Right to Buy receipts.
The changes were announced by the Secretary of State for Housing, Communities and Local Government on 30 July 2024 as part of a wider package of measures to boost council housebuilding, including confirmation that £450 million of the Local Authority Housing Fund will be given to councils to build 2,000 new homes for families at risk of homelessness in their area.
There are three new flexibilities for Right to Buy receipts which will apply to financial years 2024-25 and 2025-26:
- Local authorities can now use up to 100% of their retained receipts to fund replacement affordable housing, a significant increase from the previous 50%.
- The government has confirmed that Right to Buy receipts may be used alongside section 106 contributions.
- The cap on the percentage of replacements delivered as acquisitions each year (currently 50%) has been lifted and it is for the authority to decide the percentage of retained Right to Buy receipts they will use to fund purchases rather than new-build.
The changes are effective immediately and the Government guidance on "Retained Right to Buy receipts and their use for replacement supply" (the Guidance) has been updated. The Guidance confirms that the flexibilities will be in place initially for 24 months, subject to review. An updated agreement with the Secretary of State which reflects these flexibilities will be offered to local authorities.
The Guidance also confirms that the measures will apply to the use of receipts from 2019-20, with the intention that local authorities will bring forward replacement homes more quickly.
These flexibilities will no doubt be welcomed by local authorities who have long argued for more freedom to use their RTB receipts, particularly given current delivery and funding pressures.
Whilst the cap on acquisitions has been lifted, the Guidance states that the Government expects local authorities to "achieve the right balance between acquisitions and new builds" – the cap had previously been introduced to ensure that Right to Buy receipts were contributing to overall supply as much as possible. More generally authorities are encouraged to use the flexibilities to maximise RTB replacement homes.
Further reforms to Right to Buy are expected in the coming months. The Government has announced:
- A review of the increased Right to Buy discounts which were introduced in 2012 – further details and secondary legislation to implement the changes are expected in autumn 2024.
- A consultation on reforming right to buy more widely which is also expected in the autumn – the Secretary of State has said that while she wants to restrict Right to Buy, the intention is not to abolish it entirely.
No doubt these flexibilities will provide a welcome boost to investment in Council housing and facilitate new Council-led delivery models and we will be pleased to help address any queries you may have in respect of these changes and how they impact your delivery structure.
