Houses

Councils given power to build more homes

Councils in England will have more freedom on how they spend the money from homes sold through Right to Buy (the sale of a council house) to help them build the homes needed in their communities under reforms announced by the government.

The package will make it easier for councils to fund homes using Right to Buy receipts, including homes for social rent and give them greater flexibility over the types of homes they provide to reflect the needs of their communities.

It will also give councils more time to use receipts and to develop ambitious building programmes.

The government wants homes supplied using Right to Buy receipts to be the best value for money and to add to overall housing supply to help towards delivering 300,000 new homes a year across England by the mid-2020s.

This set of reforms, combined with the abolition of the borrowing cap in 2018, gives councils substantially increased flexibilities to build the homes England needs.

New measures include:

  • Extending the time councils have to spend Right to Buy receipts from three years to five years.
  • Increased cap on the percentage cost of new homes councils can fund from Right to Buy receipts raised from 30% to 40% per home, making it easier to build replacement homes. 
  • Allowing receipts to be used for shared ownership, First Homes, as well as affordable and social housing, to help councils build the homes their communities need.
  • Introducing a cap on the use of Right to Buy receipts for acquisitions to help drive new supply.

These changes take effect from 1 April 2021, with the exception of a new acquisition cap, which will be introduced from 1 April 2022 on a phased basis.

Commenting, Housing Secretary, Robert Jenrick said: “Councils have a crucial role to play in increasing housing supply, including building more affordable and social housing.

“I have listened to local authorities who responded to our consultation on the use of Right to Buy receipts and I am delighted to announce a package of reforms providing authorities with the flexibilities they need to develop ambitious build programmes and help get people on the housing ladder.”

Local Government Association Chairman, Councillor James Jamieson added: “The LGA has long called for reform to Right to Buy and we are pleased government has engaged with us and acted on councils’ concerns.

“Extending the time limit for spending Right to Buy receipts and increasing the proportion of a new home that councils can fund using receipts will boost councils’ ability to build desperately needed affordable housing for local communities.

“We now look forward to working with government to implement these reforms and it is good it will work through any specific local challenges some councils may face as a result of the acquisitions cap.”

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