Six-Month Right to Buy Receipts Repayment Extension Confirmed
As part of the government’s on-going response to the coronavirus crisis, councils across England are to be offered an additional six months to spend the funds raised via Right to Buy sales. First reported by Inside Housing, the government has confirmed the six-month extension which will provide local councils with additional time to spend Right to Buy funds, prior to returning the money to the treasury.
The Ministry of Housing, Communities and Local Government (MHCLG) informed councils across England that the decision had been made due to the coronavirus crisis having “halted or slowed down housing development” in some instances.
Councils have been invited to enter into a new agreement wherein the spending deadline for Right to Buy receipts will be extended to December 31 this year. This means that those taking advantage of the extension will have six additional months to make use of the funds raised via Right to Buy home sales during the 2017/2018 period.
Previously, the deadlines by which the funds would be expected to be returned to the treasury would be June 30 and September 30 this year. “By rolling up the next two deadlines to the end of the calendar year, the department’s objective is that more will be spent on replacement social housing,” read an extract from letter the MHCLG directed at all applicable councils across England.
A Welcome Extension at a Difficult Juncture
Right to Buy receipts can normally be held by local councils for a maximum of three years, during which the funds can be used to build replacement affordable housing. Otherwise, the money must be returned to the Treasury at the end of this three-year period.
Originally, the Local Government Association (LGA) had requested for the three-year allocated period to be increased to five years or more, due to concerns that there will be insufficient time to make use of the funds generated due to coronavirus-related complications.
However, the leader of Swindon Council and spokesperson for the LGA, David Renard, welcomed the government’s decision to offer a shorter extension, though stated that the group would continue to push for more time.
“We are pleased government has listened to our call for councils to be given an extension to the time they are allowed to spend money from Right to Buy sales,” he said. “With the building of new homes delayed or stopped altogether by the coronavirus crisis, many councils have been concerned that they will not have the opportunity to spend Right to Buy money on replacing much-needed homes sold under the scheme,”
“While we continue to push for a longer extension, this is a step in the right direction and will go some way to allowing councils more time to replace these homes, and make sure we can provide desperately needed social homes to those who need them.”
Though often criticised for its imperfections, the Government’s Right to Buy scheme continues to grow in popularity, having recently recorded a 4% increase in applications year-on-year. Council tenants who qualify under the scheme are currently offered discounts of up to £82,800 (increasing to £110,500 in London) off the market value of their home, in accordance with their length-of-tenancy at the time.