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Right to buy extension 'will hit housing stock'

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The government’s decision to give London social housing tenants a £100,000 discount to buy their homes will significantly reduce social housing stock, local authorities have warned.

The government’s decision to give London social housing tenants a £100,000 discount to buy their homes will significantly reduce social housing stock, local authorities have warned.

Under plans announced by chancellor George Osborne in yesterday’s budget, households in the capital will be entitled to a £100,000 discount - an increase from the existing discount of £75,000 - on the government’s “right to buy” scheme.

But councils have voiced concerns about the move, and the chancellor’s decision not to lift a cap on councils’ borrowing for house-building.

“Ordering councils to increase the right-to-buy cap while restricting how they can reinvest money from selling off homes is the wrong thing to do”, said Mike Jones (Con), chair of the LGA’s housing board.

“It is likely to exacerbate the shortage of social housing at a time when it is needed most.”

Cllr Jones said councils should be allowed to set the right-to-buy discount locally and should be given “full freedom” over the returns from this. He added that removing the housing borrowing cap would have enabled local authorities to build up to 60,000 homes over the next five years.

Jamie Carswell, director of investment services at Tower Hamlets Homes, told LGC: “This extra discount will lead to a significant fall in the levels of housing, because councils often don’t get back enough money to build a new home when one is sold.”

He said: “There is already a lot of pressure on social housing. The combination of the debt cap and the extra right-to-buy measures will add to that pressure.”

Mr Carswell welcomed the chancellor’s announcement of an extra £225m to support building 15,000 “affordable homes” from 2015. However, he said, these homes would cost 80% of market rent – a level that in London and the south east would be above the government’s benefits cap.

“It’s good to extend affordable housing but you have to ask, is this the right type of housing and is it enough?”  

However, Richard Hill, chief executive of the Homes and Communities Agency, told LGC the budget contained good news for affordable housing.

“The government has accepted the case for housing investment as a major stimulus to economic growth, and I think the overall package for affordable housing in the budget was very good”, he said.

“I do understand the concerns about the extra right to buy discount, but the overriding point is that there is a commitment to recycle the money from the sales back into affordable housing.  

“It is for the government and councils to have any discussions about the flexibility of it”.

The DCLG said in a statement: “Since the higher discounts [of £75,000] were introduced in April [last year], 3,500 council-owned properties have been sold to tenants – a third more than in the whole of the previous year, and the highest number of sales since 2007.”

Planning

A series of planning reforms were also announced in the Budget. Local areas will be asked to put in place “bespoke pro-growth planning policies and delivery arrangements” as part of new “local growth deals”.

The government will also consult on making it easier to change land uses from agricultural and retail to residential use. It will announce measures to “streamline” the judicial review process for planning decisions by this summer.

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