Analysis of Responses to the Future of Right to Buy in Scotland Consultation

EXECUTIVE SUMMARY

Right to Buy was introduced in 1980 with its current form based in the Housing (Scotland) Act 1987 and amended by the Housing (Scotland) Acts of 2001 and 2010. The 2001 Act made changes which 'preserved' the entitlements of existing tenants and introduced 'modernised' entitlements for new tenancies that started on or after 30 September 2002. The 2010 Act maintained these entitlements but ended the right to buy for new tenants, those returning to the sector after a break and for new supply houses.

The policy has increased home ownership in Scotland with 65% of Scottish homes now owner-occupied. However, the right to buy has also depleted the number of homes available to rent from social landlords at a time when there is a high demand for affordable rented housing. This has resulted in long waiting lists and challenges for local authorities in meeting their responsibilities for housing homeless people.

Following a series of consultative seminars held during 2012 with a range of stakeholders including landlords and tenants, the Scottish Government published a written consultation paper to seek views on proposals for reforming the right to buy legislation. One hundred and sixty nine responses to the consultation were received, 83% from organisations (largely social landlords) and 17% from individuals. A summary of their views on the proposals follows.

The need for more changes

Most (87%) of those who provided a view considered that there should be further restrictions on the right to buy policy. However, around one-quarter (24%) of the 29 tenant/resident groups which responded opposed further restrictions. The main reasons for supporting further restrictions were that the demand for social housing outstrips supply and that the current legislation on right to buy has become too complex to administer.

Eighty three per cent of those who provided a view agreed with the proposal to end right to buy altogether. This included 92% of Registered Social Landlords (RSLs) and 81% of the local authorities who responded on this issue. Four out of 5 of the tenant/resident groups who provided a view also advocated ending right to buy. The main reason given for supporting abolition was to stem the loss of affordable houses for rent out of social rented sector.

Of the minority (17%) of respondents with mixed views or who wished to see right to buy retained, the main rationale was that this right should not be taken away from those who held it.

Should the right to buy end, 73% of respondents who commented recommended a notice period of two years or less.

If the right to buy continues, the proposal to move those with preserved entitlement onto modernised terms received a mixed response. The main reasons provided by respondents in support of this proposal were to provide a balance between enabling tenants to buy their own homes, whilst ensuring that landlords continue to receive reasonable receipts from sales; and to reduce some of the complexity which currently exists in relation to right to buy sales. Other respondents argued, however, that under this proposal the loss of social rented housing from the sector will still be unacceptable and the complexities will remain or even increase.

Should those with preserved entitlement be moved onto modernised terms, 74% of those who provided a view stipulated a notice period of 2 years or less.

Given the choice of ending the right to buy policy or moving from preserved to modernised terms, 85% preferred the option of abolishing right to buy altogether. This was viewed as the best option to retain stock within the social rented sector, ending the current complexities in entitlements and promoting equality amongst tenants. A recurring comment was that ending the policy may result in a surge in sales during the notice period and possibly negative reactions from some tenants and sections of the media, which will need to be handled. Some predicted possible legal challenges to the change in policy. Should a decision be made to move those on preserved entitlements to modernised terms, some respondents cautioned that this would require additional staff training and the production of clear guidance to social landlords from the Scottish Government to cope with the confusion amongst tenants which may ensue.

Whatever policy option is decided, a recurring theme across a range of respondent sectors was for timely and good quality communication about the changes between landlords and tenants.

The financial effect on landlords

Around half (53%) of those who provided a view considered that the policy changes proposed would have minimal financial impact on landlords over the longer term. A further quarter (23%) predicted a financial gain to landlords. In general, it appeared that larger social landlords were amongst those most likely to rely on right to buy sales as a key source of income and were therefore most likely to encounter a negative financial impact at least in the short term.

To minimise negative effects respondents recommended early reviews of business plans to adjust strategies and budgets to accommodate the change in policy. It was also considered that retaining the option of voluntary sales by landlords could help to offset the loss of receipts if right to buy is abolished.

Other changes

The vast majority (86%) of those who commented agreed with the proposal to repeal Section 69 of the Housing (Scotland) Act 1987 which allows landlords to refuse to sell homes provided for tenants of pensionable age who have special needs, should Scottish Ministers authorise this. The proposal to allow landlords local discretion to decide which homes should be exempt from right to buy because they are needed for elderly tenants with special needs met with approval, with respondents agreeing that landlords have the local knowledge of their stock required to make informed decisions. However, one main objection to the proposal was that the repeal of Section 69 could lead to discrimination on the grounds of health, age or care needs.

The 2001 Housing (Scotland) Act extended the right to buy to all tenants with Scottish secure tenancies of non-charitable RSLs and those RSLs which became charities after 18 July 2001. The Act also allowed for this right to be suspended for 10 years from 30 September 2002. The proposal to impose a blanket suspension rather than requiring RSLs to apply for suspension every 10 years received a mixed response. Whilst it was felt that this would help to protect desirable social rented properties from being sold and could be an acceptable 'half-way' measure between right to buy and abolition of the right to buy, others argued that ending the right to buy altogether would be a much simpler and straightforward option.

Of the other right to buy issues which respondents thought should be tackled the following were most commonly highlighted:

• family members other than the tenant providing the finance to purchase under right to buy, possibly for future financial gain;
• ensuring standards of maintenance and repair are kept up in mixed tenure blocks;
• need to simplify the eligibility criteria for right to buy should the policy continue; restricting individuals to only one purchase of a social rented property and/or not allowing an individual to rent in the social rented sector if they have previously purchased under right to buy;
• and clarification of the eligibility rights on succession to and acquisition of right to buy properties.

Assessment of equal opportunities

Groups identified as most likely to gain from the proposed reforms were prospective tenants for whom more stock should be available to rent; current and new tenants; tenants requiring maintenance to their properties in future; and tenants with special needs including those with disabilities who will have more security over their home.

Those seen as being affected negatively were existing tenants who aspire to own their home but do not have the financial ability to purchase before the policy ends; people with disability and other special needs who have less opportunity than others to purchase outwith the social rented market; professional staff who currently carry out valuations on right to buy properties; and tenants living in rural areas with limited opportunity for alternative low cost home ownership.

Many respondents recommended that to counteract many of these potential negative impacts, other options for low cost home ownership should be made available and promoted and an adequate lead in time given before any changes are made. Several also recommended that a communication strategy is implemented to advise about the impending changes with high profile publicity given to convey the benefits of the changes.

The partial Equalities Impact Assessment (EQIA) developed for the consultation was welcomed as being comprehensive and fair although more emphasis was requested on the positive outcomes of the changes on disadvantaged and minority groups.

Business and Regulatory Impact Assessment (BRIA)

Positive impacts of the policy changes on organisations were identified as being an increase in viability, enabling the delivery of business aims and easing the ability to borrow. In addition, respondents welcomed what they predicted would be a reduction in the volume of administration associated with handling applications to buy and maintaining their waiting lists. It was considered that business planning would become easier if right to buy was abolished.

Only a few negative impacts on business were identified and included a possible increase in demands for transfer requests due to more choice of property within the social rented sector; losses in professional/technical staff no longer involved in valuating properties; and the need for reviewing the business plan to accommodate changed policy. The partial BRIA accompanying the consultation was generally welcomed although the assumption in the BRIA that Option 1 (do nothing) was cost neutral was challenged, whilst a few respondents considered that moving all to modernised entitlements would have more of a negative impact than suggested, on account of the complexities this would generate.