Interest in the government’s proposed Voluntary Right to Buy scheme has been relatively high since the program was first announced. A recent pilot scheme has just been concluded with volunteering housing associations in the Midlands, prompting questions as to how successful it was and how it may have paved the way for a more widespread initiative.
Back in 2015 David Cameron announced his intention to extend the Right to Buy mortgage program to every registered housing association in England. He also pledged to do so within the first 100 days of becoming Prime Minister, though it ended up taking just under 1,200 days for a pilot version of the program to be launched by Philip Hammond, Chancellor of the Exchequer in 2018.
Understandably, confidence in the scheme was not nearly as high as initial interest had been at its inception. Today, the government has once again indicated its support for the Voluntary Right to Buy scheme, confirming that it will continue to “evaluate new pilot areas in order to spread the dream of homeownership”.
There has been no official word on when or how the government intends to accomplish this, but a 127-page report has since been published by RSM Economic Consulting with details on a recently completed pilot in the Midlands to “assess deliverability, measure demand and inform the design of a national scheme”.
Initial Findings a Mixed Bag
The pilot scheme involved 44 housing associations, each of which had a minimum of 1,000 homes under its ownership. A ballot was held to determine who would be eligible under the scheme, giving tenants a window of one month to apply to take part. 6,000 names were subsequently drawn from the 9,146 people who applied.
At the end of the scheme, the RSM Economic Consulting report indicates that just over 1,890 homes had been sold or were in the final stages of being sold. This figure is significantly lower than the government’s anticipated 3,000 home sales, which were supposed to have been completed under the scheme by the late-April deadline.
“The research shows that the pilot played out broadly how we expected, which is to say associations stepped up and embraced the pilot,” commented Boris Worrall, chief executive of Rooftop Housing Group.
According to the report published by RSM: “The main challenge was that most associations did not have many, or even any, suitable homes coming available for letting of the right size and location during the period that VRTB applicants were looking for them.”
While portability was prioritised by many of the associations taking part, the RSM report admitted that porting the available discounts over to different homes owned by different landlords was extremely challenging. As a result, just five homes in total were sold this way during the course of the program.
Whether the scheme is rolled out more broadly may be determined on the basis of value for money. It is estimated that this initial pilot of the programme cost the taxpayer just under £124 million, which would increase to a total bill of more than £14.6 billion over the course of the next 10 years, if expanded nationwide.
Critics understandably argue that this money would be better invested in affordable inventory, supporting efforts to bring the UK’s housing crisis under control.