Tuesday 27th October 2026
(1 day, 21 hours ago)
Public Bill CommitteesSocial Housing Bill [HL] 2026-27 View all Social Housing Bill [HL] 2026-27 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 27 October 2026 - (27 Oct 2026)
The Committee divided: - Ayes: 4 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 11 -
The Committee divided: - Ayes: 4 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
New clause 55—Strategy relating to Right to Buy: 16 to 25 year olds.
“Within 12 months beginning with the day on which this Act is passed, the Secretary of State must publish a strategy for promoting awareness of the Right to Buy scheme to people aged 16 to 25.”
This new clause would require the Secretary of State to issue a strategy for promoting the Right to Buy scheme among young people.
New clause 57—Transitional arrangements relating to qualifying period for right to buy.
“(1) Section 119 of the Housing Act 1985 (qualifying period for right to buy) is amended as follows.
(2) After subsection (A1) insert –
‘(A2) Subsection (A1) does not apply in relation to a secure tenancy entered into before the coming into force of section 1 of the Social Housing Act 2026.
(A3) In relation to a tenancy within subsection (A2), the right to buy does not arise unless the period which, in accordance with Schedule 4, is to be taken into account for the purposes of this section is at least three years.’”
This new clause seeks to extend the transition period for the commencement of provisions in Clause 1 in relation to secure tenancies
Amendment 84, in clause 22, page 16, line 27, leave out paragraph (a).
This amendment would prevent section 1 of this Bill coming into effect on the day on which the Act is passed. Together with amendment 85, section 1 would come into force at the period of three years beginning on the day on which the Act is passed.
Amendment 85, in clause 22, page 17, line 16, at end insert—
“(3A) Section 1 (right to buy: qualifying period) comes into force at the end of the period of three years beginning with the day on which this Act is passed.”
This amendment together with amendment 84 would prevent section 1 of this Bill coming into effect on the day on which the Act is passed, instead making the commencement of section 1 to be three years following the day on which the Act is passed.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to see you in the Chair, Mr Vickers. Before I speak to clause 1, I would like to put on the record once again my sincere thanks to my ministerial colleague Baroness Taylor of Stevenage for ably shepherding the Bill through its House of Lords stages. I also thank all noble Lords who took part in the debates on the Bill in the other place. It goes without saying that we did not agree with all the arguments made—we cannot accept the incorporation into the Bill of clause 13, for reasons that I will detail in due course—but overall the expert scrutiny and challenge provided by peers have helped to improve the Bill. A number of Government amendments that we have tabled arise directly from the issues raised and the points made during the debates in the Lords.
The Bill has three core objectives. The first is to protect much-needed social housing stock and thereby to incentivise the building of more social rented homes. The second is to create a fairer tenancy system with greater protection for tenants who are victims of domestic abuse. The third is to reduce unnecessary bureaucracy and give providers greater regulatory certainty so that they can invest in new social and affordable homes with confidence.
At the heart of the Bill are comprehensive reforms to the right-to-buy scheme that are designed to put it on a fair and sustainable footing for the future. They are informed by the feedback that we received in the public consultation, which ran from November 2024 to 2025, and are set out in clauses 1 to 10.
More than 2 million tenants have exercised the right to buy since it was introduced in 1980. However, as we all know, many of the homes sold under the scheme have not been replaced, which has depleted social housing stock. There is now an insufficient supply of good-quality social housing to meet demand. More than 1.3 million households are on the social housing waiting list, and almost 180,000 children are living homeless in temporary accommodation. The right-to-buy scheme has also reduced the motivation and confidence of councils to build, since new homes can be sold before the council can recover its investment.
Although we respect those who believe that right to buy should be abolished outright, the Government’s position remains that social housing tenants who have lived in and paid rent on their homes for many years should retain the opportunity to purchase them at a reasonable discount. However, as I argued on Second Reading, there is a pressing need to radically reform the right to buy to reduce the significant outflow of stock that has taken place since discounts were drastically increased by the coalition Government in 2012, to incentivise councils to once again build at scale, and to attract broader investment in council housing.
As things stand, to qualify for the right to buy an individual must be a secure tenant and must have spent at least three years as a public sector tenant—in other words, their landlord must be a public body, usually a council or a housing association. The three years do not have to have been continuous, and an individual can add together any time they spent as a public sector tenant. They are also able to count any period when their husband, wife or civil partner was a public sector tenant.
Until 2014, the minimum eligibility requirement was five, not three, years. The main rationale given at the time for reducing the qualifying period by two years was explicitly to drive an increase in the take-up of right to buy. The decision was taken in the full knowledge that a tenant occupying a property for three years is extremely unlikely to have paid rent that equates to the available discount.
The Government believe that a more sustainable balance must be struck to support councils to rebuild their stock of homes. Clause 1 therefore amends section 119 of the Housing Act 1985 to increase the minimum eligibility requirement from three to 10 years. As under the existing law, a combination of present and previous tenancies will continue to count towards the qualifying period.
Increasing the minimum eligibility period in that way has received strong support from stakeholders. In our consultation on reforming the right to buy, 81% of respondents, including 62% of tenants who responded, supported increasing the minimum period of tenancy required to at least 10 years. In fact, the majority of respondents supported someone having to be a public sector tenant for longer than 10 years before becoming eligible for the right to buy.
The Government believe that 10 years strikes the right balance between allowing long-standing tenants the opportunity to own their own home and protecting much-needed social housing stock. Incidentally, 10 years is also the average length of tenancy for someone buying under the scheme currently. This targeted change will maintain access to the right to buy for long-standing tenants, but in a way that provides for a fairer and more sustainable scheme and better supports the long-term supply of social housing.
Gideon Amos
It is a pleasure to see you in the Chair, Mr Vickers.
I rise to support the clause. For Liberal Democrats, this is the most important and significant clause in the Bill, as it constrains the selling off of council houses. It is concerning that the Conservatives have tabled an amendment that would essentially reverse it. With 1.32 million people on the housing waiting list and 177,000 children in temporary accommodation, the last thing that we need is to continue the gradual loss of social housing. There has been a net loss of 2 million social homes since the introduction of right to buy. If that does not show that we cannot fill the bath with the plug taken out, nothing does. We stand squarely in support of the clause, although we would go further and give local authorities the ability and power to suspend right to buy completely if that is right for their area so that they can rebuild their stock of council housing and social rent homes.
Gareth Bacon
No. More than 2 million households have exercised the right to become homeowners and gain a stake in society. Until 1980, that would have been out of reach for far too many British people, but the Government are determined to wind back the clock to the 1970s and cut off the right for hard-working families up and down the country to own their own home.
Amendments 84 and 85 would take out the extended qualifying period from the day the Bill is passed, thus preventing clause 1 from coming into effect for three years following Royal Assent. That would delay the Government’s dogma and continue to support the right of 5 million people to find their place in the community, and to feel the pride and safety that comes with owning one’s own home.
Matthew Pennycook
I thank the hon. Member for Orpington for tabling new clauses 55 and 57 and amendments 84 and 85, and for speaking to them. I should say at the outset that, in political terms, he and I could not be further apart. However, he is a decent and diligent shadow Minister, as is the Liberal Democrat spokesperson, the hon. Member for Taunton and Wellington—I do not want to leave him out. I very much look forward to the robust yet civil debates we will have over the coming sessions.
I do not want to dwell too long on the more general points made by the hon. Member for Orpington, but I think it is worth responding to two of them. We are not extinguishing the right to buy through the Bill. We could have abolished the right to buy outright, but that is not what we are doing. We are ensuring that those who benefit from the scheme are long-standing tenants who have lived in and paid rent on their homes for many years.
In response to the hon. Gentleman’s point about the Bill having no impact on supply, he really ought to get out and speak to local authorities. They tell us that the benefits that they will see from the regulatory certainty and stability that we are providing, as well as the grant funding, will give them the confidence to go out and build new social homes, safe in the knowledge that, thanks to clause 1, they will not be immediately sold off after three years.
Lewis Cocking (Broxbourne) (Con)
I thank the Minister for giving way; he is always very generous with his time, and I think he is a very competent and diligent Minister in the Department. Can he provide the evidence base for what he has just said? I was the leader of a local authority, and I never once met a housing provider that told me they cannot build any more social housing because of the right to buy.
Matthew Pennycook
That is not my experience from discussing the matter with councils, and it does not reflect the feedback that we received in the consultation. Councils up and down the country tell us that they could build more if they had certainty that their stock would not be lost in the proportion that it is—and certainly not after a minimum qualifying period of three years.
Danny Beales
Having been a cabinet member responsible for council house building in Camden for seven years, and building 1,000 homes, I can say that it is a challenge when council homes can quickly leave our stock through right to buy. Having built them at great public expense, and having borrowed on a 30-year basis to deliver them, the possibility of losing that asset at a discount without recouping the investment is a material consideration. Does the Minister agree that authorities that do not build council homes but rely on housing associations might not see this as a problem, as housing associations are not included in right to buy in the same way?
Matthew Pennycook
I thank my hon. Friend for sharing his very considerable experience. There is a difference in experience between local authorities that have housing revenue accounts and those that do not, and those that build at scale and those that do not. However, it is certainly the case that councils knowing they can lose stock three years after building it without recuperating that investment is a disincentive to build.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
Will the Minister give way?
Matthew Pennycook
I will give way to the hon. Gentleman but then, in the interests of getting to the Opposition new clauses, which I am told they want to speak to, I will make some progress.
Patrick Spencer
I appreciate the Minister’s point about recouping councils’ investment, which is why there are elements of the Bill that change that deal for councils. What my residents and I do not understand—and what people across this country do not understand—is why the Government are restricting access to right to buy for a whole group of people, including young people, young parents and people at the beginning of their professional lives, who might want to get on to the housing ladder. It seems they are tackling one problem by focusing on the completely wrong element of the issue.
Matthew Pennycook
I think I understand the hon. Gentleman’s point, but I respectfully disagree. It is a problem that local authorities up and down the country build new social homes but then, after three years, they can be purchased. That is leading to an unsustainable outflow of social housing stock from the system. We are not net positive on social homes—we have not been for many years—but the Bill will ensure that we are. It gives an incentive to councils to build, as they will know that they are building more than they are losing, and therefore the 1.3 million people on waiting lists will not increase but decrease over time.
I must turn to the amendments and new clauses tabled by the hon. Member for Orpington. New clause 57 would exempt existing secure tenants from the new 10-year minimum qualifying period introduced by the Bill. As I have said, a core aim of the Bill is to protect social housing stock better and to ensure that more social homes are built than lost. If existing tenancies were excluded from the changes to eligibility rules, the vast majority of tenants would be unaffected by our qualifying period reforms. I have no doubt that that is the hon. Gentleman’s intention, but the result would be homes continuing to be sold as little as three years after a tenancy was secured, and the continued loss of significant amounts of social housing stock. That is not the Government’s aim or the aim of the Bill. For that reason, the Government cannot accept the new clause, and I hope that the shadow Minister will not press it.
Matthew Pennycook
Clauses 2 and 3 further tighten the eligibility criteria for right to buy, to ensure that the scheme is fair and well targeted. Clause 2 prevents existing residential property owners from exercising the right to buy, which we believe is a reasonable and rational approach. We have set out what we think is an appropriate definition of a residential property owner in the clause. The clause will apply to anyone who owns a residential property, whether owned outright or with a mortgage. Leasehold and freehold properties will be captured, with exceptions for short-term leases of less than 21 years, as will properties in joint ownership or owned outside England, including those held in Scotland, Wales, Northern Ireland and abroad.
Exemptions will be made for victims of domestic abuse who have moved from the accommodation that they were occupying for reasons connected to the abuse. As part of the application process, tenants will be required to declare to the landlord whether they own another property, and landlords will be able to check the information that the tenant provides. If tenants are seeking exceptionally to buy under the right-to-buy scheme where they already own a residential property because they have been the victim of domestic abuse, they will also be required to provide evidence of that to the landlord.
Clause 3 prevents those who have previously exercised the right to buy from doing so again, with exceptions in place for cases of domestic abuse and irretrievable relationship breakdown. I hope hon. Members will agree that repeat purchases would undermine the objectives of the right-to-buy scheme. It would lead to more social housing stock being lost to those who have already benefited from a publicly funded discount to buy their own home.
During our consultation on reforming the right to buy, 91% of respondents stated that they would support preventing someone who has either previously benefited from the right to buy or owns another property from being able to access the scheme. The terms of the referenced exceptions are set out in the clause and will be reinforced by updated guidance when the Act comes into force. It will be for social landlords to be satisfied that the exceptions apply, for which they will be able to ask for evidence from the applicant as part of the application process. Obviously, councils are already well practised at doing this as, under the current rules, those who have previously exercised the right to buy have their discount reduced if they seek to exercise the right to buy again.
We think clauses 2 and 3 are fair and proportionate. They are designed to appropriately restrict access to the right-to-buy scheme.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3 ordered to stand part of the Bill.
Clause 4
Timescales
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clause 4 concerns the statutory periods in which local authorities have to consider applications under the right to buy. The clause amends sections 124 and 125 of the Housing Act 1985 by extending the periods within which landlords must serve notices either admitting or denying a tenant’s eligibility for the right to buy, which relates to section 124, and setting out the purchase price and other required information, which is section 125. The period under section 124 will be extended from four to eight weeks where the tenant has been a tenant of the same landlord for the qualifying period and from eight to 12 weeks in any other case. The period under section 125 will be extended from eight to 12 weeks for freehold properties and from 12 to 16 weeks for leasehold properties.
The revised statutory periods are intended to provide additional flexibility where applications are complex, for example where there are valuation issues or safeguarding concerns. Importantly, they will give landlords more time to verify eligibility based on the new criteria and support them in carrying out preliminary counter-fraud and money laundering checks. Although we are extending the time period that landlords have to respond to right-to-buy applications, I stress that these timescales are an upper limit, not an expectation. We expect landlords to continue to process applications as quickly as they can.
Clause 5 inserts proposed new section 124A into the Housing Act 1985, enabling a landlord to suspend a right-to-buy application where there is reason to suspect that the claim may be fraudulent. A suspension under section 124A does not cancel the application; it temporarily pauses the statutory process while an investigation is carried out and must end no later than six months after the date of the suspension, or sooner if the investigation is concluded.
In response to the consultation on reforming the right to buy, we committed to carry out more effective fraud prevention, including mitigating vulnerable tenants being pressured into buying and cracking down on third-party backed applications. We are clear—I hope the Committee will support us in this principle—that fraudulent applications backed by unscrupulous lenders have no place under right to buy. They undermine the scheme. By ensuring that social landlords have more time to investigate suspected fraud when managing applications, the clause will help to prevent fraudulent applications from slipping through the cracks and maintain the integrity of the scheme.
During the period of suspension, the procedural requirements of the Act, including statutory time limits, will not apply. The tenant will, therefore, not be able to issue delay notices during this period. Guidance will make it clear that timelines for processing applications can be extended only where fraud is suspected and are not to be used by landlords as a way to delay the processing of more routine applications.
We will also strengthen guidance for landlords and tenants on fraud prevention, including third-party companies lending money for purchases. Any such companies will need to be registered with the Financial Conduct Authority, which will support both the FCA and landlords with enforcement.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5 ordered to stand part of the Bill.
Clause 6
Discount
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 29—Report on the impact of changes to right to buy discounts—
“Within the period of 12 months beginning with the day on which section 6 (discount) comes into force, the Secretary of State must publish and lay before Parliament a report assessing the impact of the changes made by that section on—
(a) overall rates of home ownership,
(b) the number of social housing tenants exercising the right to buy,
(c) social housing supply, and
(d) the provision of replacement social housing.”
This new clause would require the Secretary of State to assess the impact of the Bill’s changes to right to buy discounts on home ownership, right to buy uptake and housing supply.
Matthew Pennycook
As I have already set out, the Bill’s reforms aim to ensure that the right-to-buy scheme is sustainable, including by ensuring that discounts are set at the right level to enable long-standing tenants to buy under the scheme but without depleting levels of social housing stock.
This Government already took action in November 2024 to reduce the maximum cash discounts, returning those to pre-2012 levels. We subsequently committed to revise the discounts available as a percentage of the property value, so that they align better with the revised cash cap amounts. Clause 6 delivers on that commitment by reducing percentage discounts so that they start at 5% of the property value after 10 years of public sector tenancy, and increase for every extra year of a tenancy up to a maximum of 15%. As is the case now, the percentage discounts will be subject to cash caps that set out the maximum cash discount that a tenant can receive in their area. Aligning the discounts available as a percentage of the property value with the cash caps ensures that those who have been in their homes the longest benefit the most, while avoiding disproportionately large discounts in high-value areas.
The revised percentage discount aims to strike a balance between the responses received during the right-to-buy consultation, in which many respondents supported setting the percentage discounts lower than those proposed by the clause. We are also simplifying the rules by applying a single set of discount arrangements to both houses and flats to make the scheme clearer and more consistent for tenants.
Patrick Spencer
Would it be possible for the Government to present some kind of analysis on the impact that this policy will have on the number of sales made available to tenants? That would be important to establishing the long-term economic impact on properties across the country.
Matthew Pennycook
I simply refer the hon. Gentleman to the impact assessment. If he has further, detailed questions about it, I am more than happy to answer, but we have set out our analysis of the impact of the Bill and in particular that of the ambition to go net positive on new social housing as a result of the changes we are making.
The clause also extends the discount repayment period from the current five years to 10 years after the original sale, during which time a repurchaser looking to resell the property will be required to repay all or some of the discount on a sliding scale. That measure was supported by 72% of respondents to our consultation and it will ensure that there is less incentive for early resale, which can undermine the purpose of the scheme. It will encourage people buying to retain the property and discourage profiteering.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
The Chair
You did not bob, Gareth. We will move on.
Clause 7
Right of first refusal
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clause 7 extends the existing right of first refusal for councils to buy back homes that were previously sold under the right to buy when they are resold. The right of first refusal period is currently 10 years after the original sale, and councils have eight weeks to decide whether to buy back the home when informed by the owner that they plan to sell; following that period, the property can be sold on the open market. Under the clause, the period in which councils must be given the right of first refusal will increase, so that it applies in perpetuity, meaning that councils will have the opportunity to buy back a property every time it is resold.
This proposal received strong support from respondents to the Government’s consultation. The change will apply only to applications to exercise the right to buy after the measures come into force. Homes already sold under the right to buy will be subject to the terms of the covenants that were attached to them when they were sold under the scheme.
Giving social landlords greater opportunity to buy back properties sold under the scheme increases their ability to acquire social housing that may otherwise be lost to the open market. That directly supports the Government’s ambition to grow the volume of council housing. Clause 7 is an important safeguard that supports the effective operation of the right-to-buy scheme. It will help to ensure that public subsidy is protected, discourage short-term purchases for financial gain and support the Bill’s wider objective to protect social housing stock. I commend the clause to the Committee.
The Chair
I can see no one bobbing, so I will put the Question.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8
Exceptions to the Right to Buy
Gideon Amos
I am somewhat surprised that the Opposition spokesperson has entered into the realm of social housing supply, given the record of the previous Conservative Government. Of course, we need to increase supply as well as saving the stock that has been built with public funds—taxpayer’s money—for the community, rather than giving over discounts, sometimes to the extent of a £70,000 or £80,000 transfer of cash, from the taxpayer into the hands of individual property owners for no good reason.
We need to increase supply. That is why the Liberal Democrats have a target to build 150,000 social rent homes per year. I do not know the hon. Gentleman’s party’s target for the delivery of social housing—they did not build many when they were in government. We need to give local authorities the power and flexibility to decide for themselves whether it is right to continue with right to buy in their areas. If we believe in local communities and local democracy, we should give them the ability to say that right to buy and the loss of more council housing stock is no longer right for their area. I commend new clause 2 to the Committee and urge all Committee members to vote for it.
Matthew Pennycook
I will speak to clause 8 and amendments 13 to 18, tabled in my name, and then I will turn to various amendments that have been tabled and spoken to.
Clause 8 amends schedule 5 to the Housing Act 1985 to introduce new and updated exceptions to the right to buy. Under the scheme, exceptions already include homes suitable for occupation by the elderly, sheltered housing and homes due to be demolished. Of respondents to our consultation, 76% agree that the existing exceptions should be retained, and we are doing so. The clause does, however, make a small change to amend outdated terminology in the current exemption for dwellings for persons of pensionable age, to update the reference to resident or non-resident wardens to resident or non-resident managers.
The clause introduces three new exceptions. First, it exempts newly built social homes from the scheme for 35 years, giving councils the confidence to invest in new supply. At present, councils are disincentivised from building because homes can be sold before costs are recovered through rent, undermining housing revenue accounts. A 35-year exemption period reflects the typical pay-back period and ensures that councils are not losing new homes prematurely. Despite what the shadow Minister continues to assert, that is a significant supply-side reform that helps to deliver the Government’s commitment to back councils to build at a scale not seen in decades.
Councils have been clear to the Government that the risk of early sale deters investment. Removing that risk provides greater certainty over stock and income and supports new development. We recognise the frustration of seeing newly built homes sold so quickly before they can meet local need. The Government’s manifesto committed to better protecting newly built social housing from the right to buy, and the introducing the exemption was supported by the vast majority of respondents to our consultation on the basis that it will give councils, as I have said, greater confidence to build new homes and provide greater protection than the existing cost floor rules.
Secondly, the clause exempts homes in national parks, areas of outstanding natural beauty and designated rural areas from the right to buy. That recognises the particular pressures on rural housing where land and planning constraints mean that homes are significantly harder to replace once lost from the social sector. In many cases, replacement is not feasible at all, exacerbating already acute shortages in those areas. There was clear recognition of these challenges in the other place, where the difficulty of replacing rural homes and the importance of protecting stock in these areas was highlighted. This measure responds directly to those concerns and will help safeguard rural social housing.
Existing rural designations will continue to have effect for the purpose of this exemption until we implement the new framework for local authorities to self-designate as rural, as set out in Government amendments 13 to 18, which I will come to shortly, as well as clause 8. The covenants attached to homes that have been sold under the right to buy in rural areas, which restricts sale to a local person or a social landlord, will also continue to apply.
Thirdly and finally, council-owned market rent homes will also be excluded, supporting councils to use mixed tenure and cross-subsidy models to deliver more housing. That recognises the important role that market rent homes can play in enabling councils to generate additional income to reinvest in social and affordable homes. These changes are part of the wider package of reforms to ensure that more homes are built than lost.
Government amendments 13 to 18 deliver on commitments made during the Bill’s passage in the other place to put the criteria for rural designation into regulations. That was a call that came from noble peers on the Opposition Benches. The regulations will use the long-established criteria of a population density of no more than two persons per hectare and a population of 3,000 or fewer. That criteria will be applied using census-derived population data, and local authorities will be expected to ensure that the criteria will continue to be met in relevant areas every 10 years, as new census data becomes available.
It was also agreed in the other place that the Government would explore whether the existing process under which local authorities need to apply to the Government for designation could be replaced with a new system under which local authorities will be able to self-designate rural areas where they meet the criteria. I can confirm that we do intend to implement that change, and these amendments will enable that. These changes will provide transparency on the criteria for rural designation. They will also empower local areas and reduce bureaucracy for both local authorities and the Government compared with the current process, which, as I have said, requires local authorities seeking designation to apply to the Secretary of State, and secondary legislation to be made for each individual designation.
Matthew Pennycook
My apologies; it was tabled in the name of the Liberal Democrats. The amendment would require the Government to use the urban-rural classification system when determining whether an area is rural or urban for the purposes of the designated rural area exemption. As I have made clear, our intention is to continue with the long-established criteria for rural designation. Areas will need to have a population of 3,000 people or fewer and a population density of two persons or fewer per hectare, and we intend to set out those criteria in regulations. In our view, that strikes the right balance in defining designated rural areas for exclusion from the right to buy. Including areas with a population of 10,000 or fewer would bring far too many areas into the scope of the exclusion. For those reasons, I will not be able to take—[Interruption.] I can see the hon. Member for Newbury, and I give way.
Matthew Pennycook
I welcome that clarification from the hon. Gentleman.
Amendment 91 would require regulations made under section 37 of the Housing Act 1985, which allows restrictions to be imposed on the disposal of a home in a rural area, to be approved by both Houses before they could come into force. I understand that the intention of the amendment may have been to require the affirmative procedure to designate areas as rural for the purposes of the right to buy. Under self-designation, rural areas will be designated by local authorities instead of by regulations, so no parliamentary procedure will be needed.
The new power to prescribe the criteria will be, as I have said, subject to the negative resolution. In any event, the Government do not accept the premise that the affirmative procedure is required in that instance; there may be a principled point of disagreement on that. The current powers are subject to the negative procedure—that is the existing arrangement—which, in our view, provides an appropriate, proportionate level of parliamentary scrutiny. The powers amended or created by the Bill are also subject to the negative resolution procedure. Requiring the affirmative procedure would add an additional parliamentary step without affecting the substance or effect of the policy. For those reasons, I respectfully ask the shadow Minister, the hon. Member for Orpington, not to press amendment 91.
Amendment 83 would reduce the exemption from the right to buy for newly built social homes from 35 to 10 years. The Government cannot support the amendment. Our starting point is that the exemption should reflect the time needed for rental income to repay the costs of building a new social home. That payback period is generally between 30 and 50 years, depending on the viability of the site. We therefore concluded that 35 years strikes the right balance. It protects councils from losing newly built homes before they have recovered their investment while retaining a route to home ownership for tenants over the longer term. Reducing the exemption to 10 years would not provide sufficient protection and would act in direct contradiction to our commitment to back councils to build again at scale. It would allow homes to be sold long before their development costs have been recovered. A 35-year exemption will give councils the certainty and confidence to build, knowing that new homes will remain available as social housing for a meaningful period.
New clause 2 was tabled by the hon. Member for Taunton and Wellington. I recognise the concerns that motivated this proposed new clause. However, the Government cannot support a proposal that would allow individual local authorities to suspend or abolish the right to buy in their area. We remain committed to a reformed right to buy that continues to provide long-standing council tenants with a route into home ownership while better protecting social housing stock, and we are reforming the scheme nationally to strike that balance. This new clause would create inconsistent access to that statutory right, with a tenant’s position depending on the local authority in which they live. That would, in effect, create a postcode lottery and make it difficult for tenants to understand whether the right to buy is available to them.
We believe that the right approach is a consistent national framework, supported by national reforms that better protect council housing stock. That will ensure a fair and consistent offer for council tenants across the country. We also recognise that housing markets vary significantly across England. However, rather than creating different rights in different areas, the Government’s reforms reflect those differences through the discount regime. As I have already set out, discounts are calculated as a percentage of a property’s value and are subject to regional cash caps, helping to ensure that the scheme responds to local property market conditions while maintaining a fair and consistent national entitlement for eligible tenants.
Amendment 9, which was tabled by the hon. Member for St Ives, has been spoken to by the Liberal Democrat members of the Committee. Again, I recognise the intention behind this amendment. Community-led housing is established to meet local needs and often includes arrangements intended to protect affordability for the long term. This Government have done a huge amount in this area and there is more to come to better support community-led housing. But in our view, the amendment is not necessary in relation to the principal form of community-led housing it identifies. Homes owned by community land trusts and fully mutual housing co-operatives are already outside the right to buy, and for those reasons the amendment would not provide the protection intended, beyond that which already exists. For those reasons, I would respectfully ask that hon. Members withdraw all their amendments, and I commend clause 8 to the Committee.
Gareth Bacon
We do not share the Government’s position on this. We will be pressing for a Division on amendment 90. On amendment 83, I understand the point that the Minister made about recouping the cost. However, we believe that that is a convenience for local authorities, not for local people, and we are more interested in local people.
Matthew Pennycook
This simple and straightforward clause ensures that the reforms to the right to buy are applied fairly and consistently. It protects tenants who have already made a valid application by ensuring that applications received by landlords ahead of the reforms coming into force will continue to be subject to the existing rules. That will avoid retrospective changes that could disadvantage applicants partway through the process.
The clause also makes important provision in relation to rural exemptions, which links directly to the reforms in clause 8 and Government amendments 13 to 18. It provides that existing rural designations will continue to have effect after commencement, as if they were made under the new powers introduced by clause 8. That means that there will be no gap in protection for rural areas while the new framework in which local authorities self-designate as rural is implemented.
Together, these provisions ensure a smooth and legally certain transition, protecting both tenants’ rights and the integrity of rural housing protections. Overall, the clause provides legal clarity, fairness and continuity as the reformed right to buy scheme is introduced.
Clause 9, as amended, ordered to stand part of the Bill.
Clause 10
Right to Buy: receipts
Gareth Bacon
I beg to move amendment 92, in clause 10, page 10, line 19, leave out “a determination” and insert “regulations”.
This amendment removes the power of the Secretary of State to make a determination, but that changes to the use of capital receipts must be made by regulations instead.
Edward Argar
The very simple fact that there would be no vote on it by Members of this House, regardless of whether that was in a Committee, which is of course a subset of the House where we can debate and raise issues. I have a lot of time for the hon. Lady. I spent almost 10 years sitting on her local council before I was elected to this place, and I still closely follow Westminster politics. Consequently, I know that she is a hard-working and diligent Member who engages with all these issues particularly closely. However, the simple answer to her question is that Members would not have a vote on the Secretary of State’s determination.
With that, I will conclude by again reiterating my support for the intent behind the amendments that my hon. Friend the Member for Orpington has tabled.
Matthew Pennycook
Let me say to hon. Members that I have never found the process in Delegated Legislation Committees particularly fast in any instance, but I recognise the reasonable concerns that have been put. I think they are unfounded, and for the reasons I will set out, I hope to reassure hon. Members.
Clause 10 simplifies and modernises how the rules on right-to-buy receipts are managed. Its intent is to improve administrative efficiency and to provide flexibility. To understand our purpose behind the clause, it is important to have an accurate view of the current arrangements. As things stand, every stock-holding authority has an agreement with the Secretary of State, allowing it to retain all its net right-to-buy receipts, provided that it spends those receipts on replacement social housing.
In practice, this is hugely administratively burdensome. There are over 160 stock-holding local authorities, all of which must be issued with identical section 11(6) retention agreements whenever the rules change. That requires issuing, tracking and chasing agreements for signature across every one of those authorities, creating unnecessary bureaucracy for both councils and central Government.
Clause 10 replaces that with a simpler approach. It provides the Secretary of State with a power to disapply or modify the requirements on the use of receipts set out in regulations by determination, which will then apply consistently across all local authorities. That removes the need to replicate the same agreement process many times over.
Concerns were raised in the other place that we may be seeking to use the clause to require councils to start repaying a portion of their receipts to the Treasury. Let me reassure the Committee that that is absolutely not the case. We fought hard to ensure that local authorities could retain 100% of their receipts. Hon. Members may recall that the previous Government temporarily made that change, but reversed it before the last election.
Matthew Pennycook
Clause 11 concerns the right-to-acquire scheme for housing association tenants, which is broadly modelled on the right-to-buy scheme, with most of the same rules applying. The right to acquire applies to housing association homes built or acquired with social housing grant after 1997. The Committee has already discussed the effect of and rationale for clauses 1 to 10, which amend the Housing Act 1985 to alter rules regarding the right to buy. Under section 184 of the Housing and Regeneration Act 2008, those changes also apply to the right-to-acquire scheme for housing association tenants. The Committee will understand that it is only right for the same eligibility criteria and exemptions to apply to both schemes, to ensure consistency and fairness for social housing tenants, regardless of whether they live in a council home or a housing association home. My officials have engaged with relevant stakeholders, such as the National Housing Federation, which is supportive of our consistent approach.
Clause 11 also supports the broader policy objective of protecting social housing stock. That is a core objective of this Bill, and the Committee has debated it at length. As the discounts for the right to acquire are set out separately from those for the right to buy, they remain unaffected and will continue to be £9,000 to £16,000, depending on the location. Increasing them to align with the right-to-buy discounts would contradict our objective of better protecting social housing stock.
The clause is consequential on previous clauses, and reflects the changes made to the rural area provisions, which is currently an area of divergence between the two schemes. Under the right to acquire, homes in designated rural areas are already exempt from sale, in recognition of the challenges of replacing stock in such areas. The clause helps to ensure that the new rural exemptions in the Bill apply consistently across both schemes. The clause will provide fairness for social housing tenants, support our objective of protecting social housing stock and ensure that the new rural exemptions operate coherently across both schemes. I commend it to the Committee.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12
Restriction on certain sales of social housing by private registered providers
Gideon Amos
I will speak to amendments 5, 6, 1 and 8. Amendment 5 would extend the notification of proposed sale to cover the Regulator of Social Housing.
Amendment 6 would extend the timescales of notice from four to eight weeks. I note that, since we tabled the amendment, the Government have come up with their own amendment to extend the timescales; they have obviously been reading everything we table closely. I am glad that we are already having an impact on the Bill and I will be happy to press the amendment to a vote if necessary, to ensure that the Government succeed in getting the change in timescale that they clearly want. Otherwise, depending on the order of voting—I still sometimes have a problem following that—I am sure that one or the other will fulfil the same purpose.
Amendment 1 would require the Regulator of Social Housing to receive a copy of the notice. Amendment 8 is effectively a stop-the-clock amendment, whereby, if negotiations are ongoing for the acquisition of a social home by a local authority, the time period would be extended by a further four weeks. I recognise that the amendment refers to the four-week period in the Bill, which may be extended to eight weeks through other amendments. However, the principle of allowing an extension of time when negotiations are ongoing is significant, and something that the Local Government Association would support. Although I will not push amendment 8 to a vote, it would be helpful if the Minister considered whether an extension could be provided where negotiations are ongoing, so that there is a real chance for the purchase of that property to be completed and for the local authority to succeed in that endeavour.
Matthew Pennycook
I will speak to Government amendment 19 and respond to each of the eight amendments in this rather large group. I have listened to concerns raised by parliamentarians and stakeholders over recent weeks and months that a four-week period between a private provider notifying a council or other provider in their area of the sale of a social home and the disposing of that home is not sufficient for local authorities to consider purchasing the property.
I appreciate that local authorities were concerned that a four-week window would not align with their internal timing constraints, such as monthly cabinet or committee meetings. On that basis, the Government have tabled amendment 19 to extend the window of time that must pass between notification and the sale of a property from four to eight weeks. We think the amendment strikes the right balance between maximising opportunities to retain social homes and not causing undue delays to sales. I will come to the specific point that the hon. Member for Taunton and Wellington made about negotiations that are in train.
Amendments 6 and 8, tabled by the hon. Member for Taunton and Wellington, seek to extend the disposal notification period. Amendment 8, as he just argued, would require an extension of the window to eight weeks where a provider could demonstrate they were taking steps towards purchasing the property. The Government’s amendment 19 goes further than that proposal by requiring eight weeks in all cases, so I hope he will support it.
Amendment 6 would require a further extension to 12 weeks in areas designated as rural. We are not persuaded by the case for a longer notification window specifically for rural areas. A statutory minimum of 12 weeks could unnecessarily delay sales and require providers to deal with the additional burden and costs associated with having homes left unoccupied for extended periods. I should also stress that the notification period is just a minimum. I would expect private registered providers to engage and be flexible beyond that period where there is a serious interest from another landlord in the social housing sector.
Mr Dillon
The Government do not accept that there is a compelling case to extend the period to 12 weeks for rural areas, but an organisation may be looking to buy a property in an area of outstanding natural beauty or where there is no hard-wired infrastructure. Does the Minister not accept that more consideration needs to be given when taking on a social home in a rural area than in a well-developed town, and that someone in that situation should be given longer—on top of what the Government have already graciously accepted—to go through the sale and make sure they have all their ducks in a row and can convert the property however they might want to under restrictive planning laws?
Matthew Pennycook
I appreciate the concern. I will make two points in response to the hon. Gentleman. First, it is just a matter of fact that there will be different challenges in different areas. What we have tried to get to with the increase in the notification period from four to eight weeks is a period in which we think it is reasonable for all local authorities to consider these matters. What I have not had is compelling evidence—if he has any, I would like to see it—to suggest that local authorities would not be able to deal with these matters in an eight-week period. I stress again that the notification period is just a minimum. We would expect private registered providers to engage and be flexible beyond this period where there is a serious interest from another landlord in the social housing sector. I hope that reassures him.
Amendments 102 and 103, tabled by the hon. Members for Newbury and for Taunton and Wellington, would require written consent from the local authority for the sale of a social home in a rural area or one with four or more bedrooms. Again, I recognise the strength of feeling on this matter. I and the Government want to ensure that every opportunity is taken to protect much needed social housing stock. I would expect private registered providers to think particularly carefully before selling homes that meet acute housing needs in local areas. However, housing associations remain independent organisations responsible for their own asset management, and the Government cannot support an approach that would prevent landlords from making legitimate business decisions about how to manage their stock without the agreement of the local authority. I am happy to go into the reclassification risks that arise in this area with the hon. Members. I have debated those points at length with a number of Members on both sides of the House.
I should also point out that the previous restrictions that required approval by the Regulator of Social Housing for disposals of homes had to be removed in 2017—the hon. Member for Newbury, with his experience in the sector, will remember this—to reclassify the housing association sector back to private. I fear that introducing a requirement for local authority approval would represent a significant classification risk. It is not the only classification risk—these things are considered by the Office for National Statistics in the round—but nevertheless it is a material risk from our point of view.
Lewis Cocking
I ask genuinely about disposals, in a nice and polite way, so I wonder what the Minister’s comments will be. When housing associations or councils dispose of properties, they generally do so for a reason—for example, not being able to spend the money to get it up to a certain EPC grade that the Government have set for them. What evidence does he have that, where one company cannot do something for a social home, such as spending the money to increase the EPC rating, and therefore is selling it, another social housing provider will be able to do it? I want to understand where we are going with these amendments and this part of the Bill. When properties are disposed of, it is usually done for a reason. What makes him think that where someone cannot do it, someone else in the industry could?
Matthew Pennycook
That is a fair point. The particular reasons that individual providers dispose of stock vary wildly across the country. In the case of disposals that are driven by increases in standards, we are seeing some of that, but it is also the case that there are occasions when local authority or other providers are, for their own reasons, based on their own assessment of the stock, able and willing to take those homes on. I do not think that we can specify a general rule. What we are trying to do here is to give local authorities and other providers the maximum possible opportunity to pick up those stocks and to retain them in the social housing sector, if that is possible. To be very clear and honest with the hon. Member, that may not always be possible, and those homes may be disposed of on the open market, but we want to increase the chances of them being able to be retained in the sector, for all the reasons that we have gone into.
Amendments 1 and 5 would add the Regulator of Social Housing to those bodies that must be notified prior to a disposal. The regulator plays a vital role in ensuring that our social landlords deliver the quality homes and services that their tenants deserve. As part of the regulatory framework, private registered providers must be able to demonstrate a strategic rationale for disposals and understand the implications for their total social housing stock. I am not persuaded that requiring private registered providers to notify the regulator of a future disposal would enable it to better regulate against the standards that it sets. The regulator plays no role in approving such disposals; that decision properly rests with the landlord. The regulator is already notified once a disposal has occurred, so it has an overview of the numbers and types of disposals that are occurring.
Amendment 101 would, similarly, require community land trusts with social housing in the area to be notified. Of course, community land trusts that are registered with the Regulator of Social Housing would already be notified under the requirements of the clause. I am aware that not all community land trusts are registered with the regulator, and that is their choice, but the focus of the clause is to keep homes in the regulated sector where it is possible to do so. The notification process is therefore focused on notifying providers that are registered with the regulator.
Amendment 99 would require a sales notice provided to the local authority and other registered providers in the local area to be published on the website of the private registered provider intending to dispose of the property. One of the main aims of the clause is to increase transparency around disposals. However, there is a balance to be struck between the benefits of transparency and the burdens and costs to private registered providers. We believe that the amendment would introduce an unhelpful level of bureaucracy around the disposal notification process. While some providers may choose to publish notifications of sale on their websites, requiring publication via legislation is disproportionate.
Gideon Amos
If we are after transparency, I have difficulty with the Minister’s basing his argument on the massive cost of putting something on a website. I understand that it is a tradition of this place that the Government resist all amendments that come from all quarters other than their own, but this seems to be taking things to an illogical conclusion.
Matthew Pennycook
I certainly do not make it a point of principle to resist all amendments despite how sensible some will be. The hon. Member will see in the list of Government amendments that we will be debating many points that were raised by noble peers and that we have taken on. I will go away and reflect on how much of a burden this would be, but let me make a general point. This is my third Bill Committee as a Minister, and I sat on probably 13 while in opposition. The natural tendency of Oppositions is to call for further requirements, further regulations, further reviews and further assessments, because often they have nothing more to say on the point of principle of the particular clause. There is a cumulative impact of layering all of that on top. We want to ensure that the balance is struck properly, and that the disposals process is proportionate and is streamlined to an extent, but I will go away and reflect on the particular point and review whether requiring private registered providers to do what he suggests would be as burdensome as we think.
Mr Dillon
I support the comments of my hon. Friend the Member for Taunton and Wellington and appreciate the Minister’s commitment to go away and reflect on them. May I just add a plea? There is concern, when stock is being disposed of in local communities, that the community does not know what is going on. Having disposal notifications published online would not just allow the sector to know what is going on, but allow the local community to know what is going on with its housing stock.
Matthew Pennycook
I take the hon. Member’s point and, as I committed to doing in response to the hon. Member for Taunton and Wellington, I will go away and reflect. I am happy to provide a fuller, written answer to both hon. Members.
Gideon Amos
I beg to move amendment 2, in clause 12, page 12, line 5, at end insert—
“171AA Right of first refusal: local housing authorities
(1) This section applies where—
(a) a sale notice has been given under section 171A in relation to a dwelling, and
(b) the dwelling—
(i) is let at social rent, or
(ii) was previously transferred from a local housing authority.
(2) During the period specified in section 171A(3), the local housing authority for the area in which the dwelling is situated may make an offer to acquire the dwelling.
(3) Where an offer is made under subsection (2), the private registered provider must dispose of the dwelling to the local housing authority at existing use value for social housing.
(4) A dwelling acquired under this section must be retained as social housing within the meaning of Part 2 of this Act.
(5) Any dispute as to the existing use value for social housing shall be determined by an independent valuer appointed by the Royal Institution of Chartered Surveyors.
(6) The Secretary of State may by regulations make provision about the operation of this section.”
This amendment gives local housing authorities a right of first refusal to acquire social rent dwellings and dwellings previously transferred from local authorities at existing use value for social housing.
Gideon Amos
I will be brief. Amendment 2 would give local housing authorities right of first refusal to acquire social rent dwellings and dwellings previously transferred from local authorities at existing use value for social housing. The acquisition of those properties at existing use value for social housing, rather than at market value or existing use value, is significant, because obviously the existing use value for social housing is lower. It is important that local authorities have the ability to acquire homes that are being disposed of, so that the net reduction in social housing is not increased. I commend the amendment to the Committee.
Matthew Pennycook
As the hon. Member for Taunton and Wellington set out, amendments 2 and 3 would introduce a right of first refusal for the local authority and other registered providers notified via a sale notice during the notice period. That right would be on the condition that the home would remain as social housing and would require the private registered provider to sell the home at the existing use value for social housing. The corresponding amendment 10, tabled by the hon. Member for St Ives, would extend the right of first refusal to specific types of bodies that provide affordable housing. Some of those bodies would be registered with the Regulator of Social Housing, and therefore would already be included within amendment 3, but amendment 10 would also extend the right of first refusal to unregistered housing providers.
I have heard clearly, both on Second Reading and today, the desire of hon. Members to protect social homes. I very much share that desire, but that must be balanced with the ability of private providers to operate efficiently and manage their housing assets, including by investing in more new homes or their existing stock. Sometimes that can mean selling a social home out of the sector. I can assure the Committee that I have fought long and hard, and challenged officials—they can verify that with nods—to ensure that we look in a lot of detail at what requirements can be put in place, and what levers we can try to pull, to keep as many social homes in the regulated sector as possible.
A key consideration when thinking through possible interventions is the reality that interfering with private registered providers’ freedom to use and sell their assets as they wish would present a significant risk of reclassifying the sector. Not only would that bring £110 billion of debt on to the public books, but it would bring with it risk and uncertainty that could impact on the investment in the sector that is so needed.
As I have said, I hope the disposals measure in the Bill will ensure greater transparency around disposals and support better dialogue between private registered providers and local authorities. I hope it will also focus minds to ensure that we minimise any negative impact resulting from disposals. Of course, there is nothing to prevent a private registered provider from choosing to sell to another provider at a lower price on the understanding that it remains social housing. I hope that the notification requirement introduced by the Bill will support such discussions. I am very open to ideas about what more can be done to support that dialogue, and I have tasked my officials to work with the sector to identify and promote good practice, as well as to explore what more the Government might do to reinforce it.
Given the issues that I have highlighted, I believe we will get the best results by working together with private registered providers and local authorities to explore what more they can do and where we can support them to keep homes in the regulated sector. For the reasons that I have set out, primarily around reclassification risk, we cannot accept the amendments, and I ask the hon. Gentleman to withdraw his amendment 2.
Gideon Amos
I appreciate the Minister’s response. The amendments are genuinely intended to provide councils with the ability to acquire stock rather than see it lost from the social housing sector. This is a particularly important area and, I believe, an important amendment. I understand the risks of reclassification on to the public sector balance sheet. I wonder whether the Minister would be willing to publish the advice he has received on that, because the sector will want to understand why first refusal cannot be given to local authorities.
Matthew Pennycook
I appreciate the attempt, let us say, to have confidential advice to Ministers published in the round. That is not the usual practice—