Right to buy plans are "unnecessarily restrictive" and will inhibit councils, say consultation respondents

The proposed Right to Buy model outlined a two year period within which councils must spend their retained receipts from the sold housing to fund replacement homes. This is an "unrealistic timeframe", according to consultation responses.

"Our principal objection is to the requirement that receipts should be used within two years of arising", representative body the Association of Retained Council Housing (ARCH) said (2-pages / 199 KB PDF) in its response. Other respondents included the Chartered Institute of Housing and the Local Government Association.

For most councils, self-financing and receipt retention provide the first opportunity to develop new council housing for many years, ARCH said. Councils need time to put arrangements in place, such as identifying sites, evaluating development potential and obtaining planning permission.

ARCH recommended that the draft agreement should be amended to include an extension to the re-use period of the housing receipts to at least three years.

The Government announced in March that the cap on Right to Buy discounts would be raised to £75,000, and that receipts from the additional sales this would generate would be used to fund replacement stock on a one-for-one basis .

It also announced that local authorities would be able to retain receipts to fund new housing in their areas.

The responses showed that councils are concerned that the draft agreement "is unnecessarily restrictive" and will prevent them from building sustainable communities that represent good value for money.

Under the proposals, councils would not need to complete the building of any home within two years, but would need to have incurred expenditure on the homes, up to 30% of its cost.

The 30% cap is included as this is the maximum amount of receipts that councils are allowed to contribute to the funding of new replacement homes, under the proposed model. This is to ensure the Government "get maximum value for money from Right to Buy receipts", it said.

Councils must fund the remaining 70% of the cost of the house from its own money, or through borrowing against the anticipated rental income from the new homes built, the Government said in its consultation.