In 2021, the National Federation of Builders (NFB) House Builders Association (HBA) wrote to the Government to recommend five reforms that would not only retain existing social housing but increase social housing stock too. In 2022, the HBA published those recommendations in the second edition of
The five social housing recommendations were:
- Increase the qualification period for Right to Buy on new homes
- Implement a social rent covenant on new Right to Buy homes
- Utilise planning reforms to enable more social homes
- Be more open minded with the myriad models available to build social homes
- Establish a social housing taskforce within Government
On 28 June 2023, shadow housing secretary Lisa Nandy stated that Labour, if elected to Government, would retain ‘Right to Buy’ and ensure homes are replaced. In response, the HBA is calling on Labour to also focus on a social rent covenant proposal, which ensures sold ‘Right to Buy’ homes that end up on the rental market must be rented at social rent levels:
Why a social rent covenant?
After a qualifying period, those living in council houses can purchase them at a discounted rate using ‘Right to Buy’ and while this is popular policy, lost council homes are not being replaced.
Many also express a concern that Right to Buy homes simply end up in the private rented sector and subsidise future landlords, therefore it would be sensible to implement a social rent covenant which ensures that if any future ‘Right to Buy’ home is put up for rent, landlords could only charge at social rent levels.
This amount would be calculated using comparative local rents, or the historic social rent plus inflation.
Initially only for new build, to ensure local authorities felt empowered to build homes and not financially lose out, the covenant would need to circumvent local authority rules on primary residence rental restrictions and seek co-operation with lenders.
The ‘Right to Buy’ discount period and amount may need to be adjusted so that the capital cost of the build is paid back.
The public sector would also be better able to influence market rates because rather than implementing rent controls, which locks new people out of communities and reduces housebuilding, it would be delivering homes for local people, which were either owned or rented at significantly below market rate.
Penalties and ‘social rent home registers’ would ensure that enforcement costs could be kept to a minimum.
Rico Wojtulewicz, Head of Housing and Planning Policy at the HBA, author of the original article, said:
“‘Right to Buy’ is about empowering homeownership, not subsidising buy to let businesses, therefore with no agreement on the ‘Right to Buy’ concept, anything that encourages councils to build homes, navigates ideological political differences and increases the number of affordable houses available should be implemented as quickly as possible. A social rent covenant helps to do that.
The housing crisis isn’t getting any better by waiting for a perfect solution. We need action now.”