Replacements for right-to-buy (RTB) housing sales fell off a cliff across northern England last year, with a mere 23 new homes in the North East and North West regions, in contrast to hundreds in all other parts of the country.
Numbers in the two regions were also only a small fraction of what they were in previous years. All but two councils – Newcastle and Manchester – registered no replacements at all in 2021-22, according to updated figures from Department for Levelling Up, Housing and Communities (DLUHC).
The drop followed reforms of the RTB replacement scheme which, according to the DLUHC, are intended to form part of the government’s “ongoing commitment to helping councils play their part in building the social and affordable homes that England needs”.
Sales and receipts
RTB sales in the North East in 2020-21 (latest available) totalled 462. There were none in Hartlepool but elsewhere in the region ranged up to 115 in North Tyneside. Sales in the North West totalled 381, from one in Oldham to 132 in Wigan.
Not all councils still have housing stock to sell, having disposed of almost all their homes to a registered provider and closed their housing revenue accounts.
Nevertheless in 2021-22 six councils in the North East received a total of £36.618mn from RTB sales, ranging from £1.703mn in Darlington to £9.470mn in Newcastle, while in the North West ten councils received £35.021mn ranging from £588,000 in Barrow-in-Furness to £12.362mn in Manchester. Some of these receipts result from earlier sales dating back to 2012-13.
Reforms
The rules for using receipts changed in 2021, including:
- The timeframe local authorities have to spend new and existing RTB receipts was extended from 3 years to 5 years. This, said the DLUHC, would make it easier for local authorities to undertake longer-term planning, including remediation of larger plots of land;
- The percentage cost of a new home that local authorities can fund using RTB receipts increased from 30% to 40%. This, it was said, would make it easier for authorities to fund replacement homes using receipts, as well as making it easier to build homes for social rent;
- Authorities can use receipts to supply shared ownership and first homes, as well as housing at affordable and social rent, to help them build the types of home most needed in their communities; and
- A cap was introduced on the use of RTB receipts for acquisitions to help drive new supply with effect from 1 April 2022 and phased in over 2022-23 to 2024-25.
The reforms may be starting to have the desired effect in some other parts of the country, judging by RTB replacement figures, and may eventually do so in the North East and North West too. But so far in these two regions they have only presaged, though not necessarily caused, an affordable homes disaster.
Replacements
In 2020-21 starts and acquisitions funded through the receipts retained from eligible sales (local authorities, Homes England and the Greater London Authorities combined) were 159 in the North East and 326 in the North West.
In both regions these were the highest since 2012 and though they were the lowest in England, where replacements ranged from 482 in the South West to 1,612 in London, they were arguably disappointing rather than catastrophic in comparison.
But in 2021-22 the North East figure plummeted to only 19 RTB replacements, all in Newcastle, and in the North West to just 4, all in Manchester. Whatever the causes of these dramatic falls they were not seen in other parts of the country. Replacements in other regions were more or less sustained at their previous levels, ranging from 355 in the South West to 1,520 in London. The West Midlands and South East actually saw small increases.
Government statement
The DLUHC told North East Bylines:
“There are several factors that may have had an impact on the number of replacement starts using RTB receipts in 2021-22 across all regions, including the North West and North East. This includes difficulties sourcing raw materials, lockdown restrictions imposed in early 2021 in response to the COVID-19 pandemic and rising inflation in 2022.
“Additionally, in April 2021, the time frame local authorities have to spend new and existing RTB receipts was extended from 3 years to 5 years. In effect, this means that compared to 2020-21, there is less of a requirement to spend the money earlier during the retention period, i.e. in 2021-22 or 2022-23, which may be impacting on current replacement figures.
“In addition, RTB sales are typically lower in the north, than in London and the south, which translates into fewer replacements overall in these regions.
“The package of reforms on RTB receipts introduced in 2021, is however providing local authorities with the flexibility they need to build more replacement homes. This will take time to come through, and we will continue to work closely with local authorities on increasing replacement.”
