Lockhart Grey Financial Planning Ltd

The Scottish Government has just completed its final consultation on its latest Housing (Scotland) Bill.  This new bill is due to be implemented in the first quarter of 2010 (in the coming months) and impacts every council and every tenant.

The Scottish Government is committed to safeguarding social housing for future generations. Around one in four Scottish households lives in social housing that provides a secure and sustainable alternative to home ownership for over 600,000 households across the country.

The Right to Buy (RTB) has meant that over 500,000 have been sold in Scotland since RTB was introduced.  The new bill will mean tens of thousands of tenants will lose the “right to buy” for next 10 years.  But why is this?

Due to the poor state of our country’s finances, public funds are extremely stretched and only 2,000 new affordable homes will be built this year.  To plug this gap, the Scottish Executive is bringing in a tougher new Housing Bill to try to put in reforms to stop or remove tenants’ rights to buy.  In other words:
•    ending the RTB on new supply social housing
•    ending RTB for new tenants
•    increasing the amount of pressured-area designations (PAD) area to stop RTB
•    seeking extensions to the ten year suspension on RTB

The previous Housing Bill 2001 forced councils to find new money to bring its housing stock up to the new Scottish Housing Quality Standard (SHQS) by 2015.  Many councils could not raise the money needed (via massive rental increases) to invest in updating their housing stock and were forced to transfer its housing stock over to a Housing Association where new investment could be loaned to them.  Other councils were forced to sell a large proportion its own housing stock to its tenants under the “Right to Buy” scheme to bring in the additional money it needed to invest in upgrading the rest of its housing stock.

So what impact does this new Housing Bill bring to tenants?  Every council and housing association has already told the Scottish Government of the likely impact of this new Bill.  The findings of the “Draft Housing (Scotland) Bill” consultation survey was as published in November 2009.  The consultation paper set out proposals to reform the Right to Buy ( RTB) for social housing tenants and modernise regulation of the social housing sector.  These impacts are listed in the table below.

Potential Impacts on the Right To Buy on Scottish tenants

Identified Impacts (Quotes) of the new Housing Bill Consultation Paper	What it means to tenants
"Any gap in capital investment could be made up from increasing borrowing but this may require an increase in rents to service additional borrowing."	If tenants lose their “right to buy” the councils will face a financial shortfall that will probably mean that tenants rents will increase to fill this funding gap. This will mean further rent increases for many more many years to come. This means that owning your own home with a mortgage may be a cheaper alternative to renting in the future.
“Landlords [Local Authorities/Housing Associations] would lose income from RTB capital receipts, over the longer-term they would receive rental income from retained and newly developed properties.”	This means that councils have already identified that there will be less “right to buy” sales and have to make their money from rental alone; resulting in further rental increases.
"Borrow more to fund improvements, reduce Capital Investment Programme or raise rents."	Councils face a funding gap and the only way to close this funding cap is to either borrow more or get more money from their tenants; resulting in further rental increases.
Several respondents [councils] took the opportunity to express the view that they would like to see the RTB [Right To Buy] ended more conclusively by widening the definition of new supply social housing to: ..all properties let (or re-let) after a set date."	Some council’s are already looking at ways to stop more of their current tenants from buying their council house.
[Several councils were] “opposed to the specific proposal that existing tenants moving to a new supply property would lose their RTB.”	The new Housing Bill means that if a tenant is moved to a newer, or upgraded property, then they will lose their right to buy.
“...concerned about the situation for tenants affected by demolition and subsequently rehoused in new-build properties. “ “...sought clarity on the entitlements that tenants would have where demolition sees tenants rehoused under a new landlord.” “Any tenants moving to new supply housing should not have any RTB entitlements on such properties.”	Some council’s see the rules within the new Housing Bill as too strict; where tenants will lose the right to buy if the tenant is forced out of their current home for many reasons.
"Low income groups ...,who are already under-represented in the social housing sector, will not have the same opportunities to build up asset wealth under these proposals... These proposals could...also penalise young people who are also most likely to enter the social rented sector for the first time."	The new Housing Bill will mean that low income families and young tenants will lose their right to buy and will make it harder for them to get on the property ladder and be able to own their own home in the future.
“Many respondents [Councils/Housing Associations] supported the proposals to strengthen pressured-area designations as they felt it is an effective tool to preserve dwindling social housing stock.”	The new Housing Bill makes it easier to councils to apply for pressured-area designations (PAD) areas where tenants no longer have the right to buy if they live in this area or if their home is a specific type of property that is in short supply.
“96% of Councils and 93% of Housing Associations agreed that the maximum [pressured-area] designation period should be increased from five to ten years.”	The new Housing Bill will allow councils to stop tenants from having the right to buy for at least 10 years if the tenant lives within a PAD area.
“All councils and housing associations agree that particular housing types to be designated as pressured [status] and that Ministers devolve pressured area decision-making to councils.”	The new Housing Bill will probably allow councils themselves to set PAD areas. This means that tenants will quickly lose the right to buy with minimum resistance, within short timeframes and with no resistance from tenants.

Unfortunately, the Scottish Executive has sounded the death knell of the “Right To Buy” which allowed council tenants to buy their homes. Tens of thousands of tenants in Scotland, who would have previously qualified, will be banned from buying homes at knockdown prices.

The Scottish Executive has taken the first formal step to end the Right To Buy in Scotland. The Scottish Government has just completed its final consultation on its latest Housing (Scotland) Bill. This new bill is due to be implemented in the first quarter of 2010 (in the coming months) and impacts every council and every tenant. This new bill affects you and your home.

Based on the above, we say the time to act on YOUR right to buy, is now!

Dont wave bye bye, to your Right to Buy!