The Right to Buy – The potential impact in Wales

Steffan Evans explores what an extension of Right to Buy in England could mean for Wales.

The Conservative party manifesto pledge to extend the right to buy to Housing Associations in England means that it seems certain that housing will be one of the key battlegrounds over the remaining weeks of this general election campaign. However, given that powers over housing are devolved to the National Assembly, what impact if any, could this policy have on us in Wales?

This is a policy that highlights the differences developing across the United Kingdom as a consequence of devolution. It already seemed likely that the right to buy would be a key talking point during the Assembly election campaign in 2016. Welsh Ministers already have the power to suspend the right to buy and used it for the first time in January 2015 in Carmarthenshire.  Following this decision the Welsh Government began a consultation process to consider whether it should expand on this and follow the lead of the Scottish Government and scrap the right to buy altogether. If the Conservatives were to win the 2015 election and implement this extension of the right to buy, then it seems inevitable that such a move would have an impact on the nature of the debate that would take place in Wales before the Assembly elections in 2016.

As ever, the impact of any change in England on us in Wales could be most visible in the funding that the National Assembly receives under the Barnett Formula. The Conservative manifesto pledges to pay for this extension of the right to buy by forcing local authorities to sell off their most valuable properties. According to the Conservatives manifesto this could raise some £4.5 billion though this figure is subject to some debate. It is unclear from the Conservative manifesto whether the money raised from Local Authorities will be transferred to the Treasury before funding the right to buy policy or whether this funding would go straight from Local Authorities to Housing Associations. If it is the former then Wales will be entitled to a percentage of this extra money, if it is the later, Wales will not. As more information emerges on how the policy will be implemented over coming weeks this could become an increasingly important point of discussion here in Wales.

The expansion of the right to buy to housing associations in England could also lead to changes in how housing associations operate in England. Housing Associations are independent organisations and whilst they do receive funding from the state they are also dependent on private lending in order to develop their social housing portfolios. Any move to introduce the right to buy to housing associations would seem certain to have an impact on any future lending agreements as the properties themselves are often used as security against which associations can borough. If it did become increasingly difficult for housing associations to borrow in England then it’s probable that fewer social homes would be built in England by Housing Associations unless there is a significant increase in grant funding from government, or without Housing Associations significantly expanding the number of homes they provide at the market rate.

This change in England would have an impact on us here in Wales. Whilst powers over housing are devolved to the National Assembly powers over housing benefits are expressly reserved to Westminster. Due to this reservation the UK Government had the power to introduce the bedroom tax here in Wales despite objections from Welsh Government. If the social housing sectors in Wales and England continue to diverge over the coming years then any future changes in housing benefits could have very different consequences on each side of Offa’s Dyke. This has already led some to call for the devolution of housing benefits and these calls are only likely to grow louder whether the Conservatives extend the right to buy to Housing Associations in England or not.

Steffan Evans is a PHD student at the Wales Governance Centre, Cardiff University. His research is on the impact of devolution on social housing regulation in England and Wales.

2 thoughts on “The Right to Buy – The potential impact in Wales

  1. Standby for further waves of people who, with moderate ability coupled with a twenty year tenancy, buy their HA/council house in London for a massive discount then promptly sell realising enough cash to move to rural Wales and buy the biggest house in the village. Of course once settled they will complain vehemently about lack of local services, healthcare facilities and jobs whilst signing on the dole and voting UKIP.

    The reinvigoration of the RTB policy is a highly dangerous ploy to capture working class votes primarily within the property price obsessed Conservative heartland of SE England. What happened to financial prudence and stamping out the ‘something for nothing’ culture ?

    The current SE localised housing bubble is one of the most dangerous we have ever seen. It has come about at a time when interest rates are at a historic low yet sums borrowed are at their highest. Everybody is watching the Fed as a hike in interest rates in the US is imminent – Carney will have to follow here but he will run the risk of crippling the recent property owning class in the SE when they have to stump up higher interest payments on their inflated borrowings.

    More RTB, raising the threshold for inheritance tax, allowing people to cash in pensions simply inflates the bubble. That bubble must not burst before an election as our feeling of recovery is fuelled by consumer spending based on people belng more confident in the SE because their house has gone up in value. Should the bubble burst, the oligarchs and asian buyers, who were the catalyst for the bubble, will shrug it off – money laundered and safe in London property at even a 50% discount is better than having it snatched by Mr Putin ??

    Reviving our economy through re-envigorated manufacturing and re-balancing it away from the SE – didn’t happen.

    I welcome any policy to prevent RTB in Wales – too much Housing Benefit is paid to BTL landlords here already – and not uncommonly for tenants of former council houses. What I haven’t seen is Local Authorities flexing their muscles to increase business rates (now devolved) on dormant brown field sites to increase pressure to see them better utilised for housing or industrial use.

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