The Frome Area Community Land Trust is committed to providing new homes for social rent. We stipulate ‘social rent’ because many homes which are built these days with the ‘affordable’ tag are distinctly unaffordable for many people in housing need. By contrast, social rent is typically only 50-60% of ‘market’ rents, genuinely affordable for those on lower incomes (such as the carers and health workers we’ve been applauding recently). Social rent is the level of rent paid by most council and housing association tenants.
However, one tricky little minefield now built into the social housing system is the Right to Buy (RtB). Originally introduced by Margaret Thatcher’s government in 1980, the RtB has given many council tenants the right to buy their council homes at a considerable discount. While this has been great for the individuals who have benefited from the scheme, it hasn’t been so great for the many who have as a result had to languish for years on council housing waiting-lists. Around 2 million council properties in England have been sold so far through the RtB. In 1980 around 31% of homes in England, 5.5 million in total, were rented from a social housing landlord (council or housing association). Today this number has fallen to around 17% – 4.1 million. The Right to Buy has rewarded one generation at the expense of the next.
Fortunately (or not, depending on whether you’re a winner or loser), the RtB has not been available to housing association tenants. And here in Mendip, all new social housing is currently built by housing associations – also known as Registered Providers (RPs).This change follows the transfer of all council housing to a newly established housing association, which is known these days as Aster. Instead of the RtB, the government in 1996 introduced for housing association tenants something called the Right to Acquire. While the key principle was the same as for the RtB, there are some differences, the biggest of which is the level of discount available. Basically it is much lower for housing association tenants at between £9,000 and £16,000 per property, compared to up to £84,000 for council properties.
Why this difference? What have governments got against housing association tenants? The reason why the RtB was not automatically extended to RP tenants is that housing association development is part-funded by private loans, which are then paid off over time through the rental stream. If many tenants were enabled to buy their homes, the value of the housing association’s asset base could be eroded and their rental stream reduced, which would deter lenders from backing them. Actually some housing association tenants do still buy their homes under the Right to Acquire, but in 2020-21 the number was only 777 for the whole of England.
However, if you’ve managed to read this far you will be fascinated to learn that the picture has become even more complex. The 2012 Coalition government set out to ‘reinvigorate’ the RtB, and one of their reinvigorations (is that even a word?) was to introduce (wait for it!) the Voluntary Right to Buy (VRtB) for housing association tenants. The reason for the ‘voluntary’ tag is that, rather than being imposed by primary legislation, it has been introduced via an agreement with the housing association sector. This agreement gives housing associations some lee-way in how they implement it, including the circumstances in which homes and tenants will be exempt from the VRtB.
The last piece in the jigsaw is the new Right to Shared Ownership, introduced in 2020 by the present government. As the title implies, this gives RP tenants the right to convert their tenancy to a shared ownership lease, starting with a stake as little as 10% and buying further increments over time if they wish.
So what does this all mean for a Community Land Trust like us? We are aiming to acquire land to build social rented homes because a large number of people with a connection to Frome, such as young people who have grown up here, people who need to receive or give care locally, people with jobs in the town etc, are currently unable to find an affordable home of their own. But we don’t want to do this just for the first set of people who will get the keys. We want these homes, for as long as they last, to remain genuinely affordable for future generations. The good news is that, as a Community Land Trust, we can make this happen.
In each of the forms of transfer outlined above for housing association homes (Right to Acquire, Voluntary Right to Buy, Right to Shared Ownership), homes that are owned under a freehold by a Community Land Trust are specifically exempt from sale to the tenants. And even where there is some legal fuzziness, the Community Land Trust can and will include a clause in any leases with housing associations to protect the exemption.
Of course the RtB, in all its forms, would not be such a problem if the homes sold for discount to existing tenants were replaced by newly built social rented homes. But this has not been happening. Receipts from the sale of homes under the RtB have never been ring-fenced for the re-provision of social housing. In fact many homes sold under the RtB have then been rented out privately by the former tenants. Social rent landlords often end up renting back homes they once built and owned, to meet the needs of homeless households, due to the shortage of social housing in their areas.
The Frome Area Community Land Trust will not allow this kind of craziness to happen to the homes we are involved in providing.
Chair of the Board of the Frome Area Community Land Trust
(With thanks to Steve Watson from Middlemarch Community-Led Housing for some of the information).