Out-Law News 1 min. read

Councils must prove ability to build new homes to get RTB receipts


Local authorities will only be able to retain money earned under the 'right to buy' (RTB) scheme where they can demonstrate that they have the ability to build replacement housing under the Government's new Housing Strategy, a council housing authority has warned.

There has been growing concern amongst some local authorities surrounding the way RTB receipts will be distributed. The fear is that receipts will be unevenly distributed and the parts of the country that are perceived to be in greater need of housing will be favoured, such as London and the South East.

"We all have to demonstrate that if we keep the receipts ourselves we can deliver the housing they want...If we give them up, they won’t be spending too much in the north," said Ken Lee of Wigan and Leigh Housing .

However he said that the new strategy, announced on Monday, was an opportunity for councils to secure local funding for new builds.

The Government announced on Monday that it would launch a consultation to find "the best way to ensure delivery of replacement homes". Under the RTB model the Government has pledged to replace every additional home sold under the RTB with a new home for affordable rent.

"We will consult on how we can further incentivise recycling of receipts from additional sales into replacement, and will review progress achieved at the next Spending Review," the strategy said.

The consultation will ask local authorities whether they would prefer to see receipts from the invigorated scheme used locally or distributed through an agency such as the Homes and Communities Agency.

It will also decide on the appropriate level of discount to be made available to buyers, although the housing strategy indicated that these could rise to as much as 50% of a property’s value.

In the Government's housing strategy released this week, there are three models that will be considered: local delivery; national delivery and; the combined approach.

Local delivery would allow councils to retain RTB receipts to then reinvest locally. The national delivery approach would allocate the receipts to a national programme that would then be administered by the HCA.

The combined approach would allow councils to retain receipts where they could deliver one-for-one replacement housing and secure good value for money in commissioning, while those who prefer not to lead on commissioning replacement could  surrender receipts for national distribution.

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