MHCLG say the new measures aim to make it easier for councils to fund homes using Right to Buy receipts, granting greater flexibility over the types of homes provided to reflect local needs and has extended the time councils have to spend Right to Buy receipts from three to five years.
It has also increased the cap on the percentage cost of new homes that local authorities can fund from Right to Buy receipts from 30% to 40% per home. MHCLG said this change would make it easier to build replacement homes.
Councils will also be allowed to use its receipts to deliver a wider range of homes, including for shared ownership and First Homes, as well as affordable and social housing and MHCLG will introduce a cap on the use of Right to Buy receipts for acquisitions “to help drive new supply”.
Through the measures, it is hoped councils will develop ambitious building programmes to help towards the government’s target of 300,000 new homes a year by the mid-2020s, with the department adding that it wants homes delivered through Right to Buy receipts to be “the best value for money”.
The reforms would give local authorities substantially increased flexibilities to deliver the homes needed in their communities, adding to the removal of the borrowing cap in 2018 and will apply from April 1. However, the new acquisition cap will be introduced from April 1 2022 on a phased basis.
These reforms follow a consultation, launched more than two-and-a-half years ago, on how councils could use the receipts from sales of council housing under Right to Buy to deliver replacement homes.
Robert Jenrick, Housing secretary, said: “Councils have a crucial role to play in increasing housing supply, including building more affordable and social housing.
“I have listened to local authorities who responded to our consultation on the use of Right to Buy receipts and I am delighted to announce a package of reforms providing authorities with the flexibilities they need to develop ambitious build programmes and help get people on the housing ladder.”
