Oral - Legislative Statement on the proposed Affordable Housing Legislative Competence Order

 I am pleased to be able to lay this legislative competence Order before you today for your consideration. This Order will seek to allow the Assembly to have the power to pass Measures in the area of affordable housing—a subject whose importance and profile has risen significantly over recent years. 'One Wales’ includes a commitment to seeking legislative power for the Assembly in order to suspend the right to buy in areas of housing pressure.

Commitments were also made in the election manifestos of both coalition partners as well as in the manifesto of the Liberal Democrats. The Assembly approved a motion last January that these powers be sought. The Assembly Government has used its powers to make secondary legislation concerning the right to buy that is tailored to the particular circumstances of Wales, which includes reducing the maximum discount and extending the number of rural areas in which restrictions may be placed on resale.

The Assembly currently has no express statutory power to vary the qualification provisions of the right to buy and the right to acquire in order to meet the particular housing needs of people and communities in Wales. I wish to stress at this point that the Assembly Government supports the concept of homeownership, including the right to buy. We have recognised the benefits that mixed-tenure estates provide, and we are currently developing proposals to provide grants for first-time buyers and have already enabled registered social landlords to offer properties for sale to existing tenants on homebuy terms. Moreover, in making those voluntary disposals, registered social landlords are able to impose repurchasing covenants, to ensure that the stock is not lost from the affordable housing sector on resale.

The availability of affordable housing is a particular problem in rural areas where the supply of suitable properties is usually very limited. More than 70 per cent of Wales can be regarded as rural. The Assembly Government has taken a number of actions to assist in the development of affordable housing in rural Wales, including providing support for rural housing enablers and community land trusts. However, in some communities, few properties remain in the social housing stock, which makes it very difficult for people on modest incomes to find a home that meets their needs and provides a suitable place for raising their children. Indeed, almost 60 per cent of council housing stock in Powys and Ceredigion has been sold under the right to buy and the right to acquire.

Since the introduction of the right to buy in 1980 and the right to acquire in 1997, tenants in Wales have purchased more than 140,000 dwellings, which is almost half the original social housing stock. Although the immediate effect of a tenant exercising these rights is a change in tenure from tenant to owner-occupier, dwellings that would otherwise have become available at some point for re-letting for social housing have now been sold on the open market. This has substantially reduced the amount of social housing that is available for rent by people in housing need. This is a particular problem in areas of housing pressure.

It is too early to say what the detailed provisions of the Measure might contain. However, I can tell Members that we are considering arrangements whereby local authorities can apply to Welsh Ministers for approval to designate areas in which the right to buy and the right to acquire may be suspended for a limited period. We think that it is right to give authorities this power, as they are responsible for compiling local housing strategies and local housing market assessments. They are best placed to assess the local situation, and this power is just one of a number of actions that local authorities will be able to undertake.

Where an authority retains its housing stock and disposes of properties under the right to buy, it has the discretion to retain the full receipt for use for housing revenue account purposes. While the authority can retain the actual receipt, there is an effect upon its housing subsidy. The impact for each authority will vary according to its individual housing revenue account circumstances. However, typically, a local authority may retain 25 per cent of the receipt and decide to reduce its debt burden with the remaining 75 per cent.
All registered social landlords, including transfer organisations, can retain right-to-buy and right-to-acquire receipts in full to offset the loss of rent income resulting from the disposal. The inclusion of such receipts is generally beneficial to their finances. The extent to which the finances are affected will be proportionate to the number of sales.

We will need to take these matters into account when drafting the Measure, and consult fully on the detailed proposals. Although the proposals are not finalised, I do not anticipate any limit on the size of the area or the type of housing that could be designated for suspension. Authorities could target the policy to cover very small areas or a specific housing type that is experiencing pressure. I would certainly not expect authorities to suspend the right to buy or to propose to do so throughout their counties or county boroughs.

I would want to see convincing evidence of the case for suspension, including a demonstration of thorough consultation with local communities. Much of the detail has yet to be worked out. However, we will engage with all interested organisations and tenants’ groups before placing a proposed Measure before the Assembly.

To conclude, it is clear that the right to buy has had a significant effect on the supply of social housing available for rent. Affordability is a major issue throughout most of Wales, and we are taking steps to address it. We need additional powers to make the right to buy more appropriate to the needs of Wales. That is why we have placed this LCO before you today. I hope that we can count on your support. We are expecting the LCO to be cleared by the UK Government very shortly, and we have had detailed discussions with colleagues in the Department of Communities and Local Government over both the LCO and the UK Housing and Regeneration Bill to ensure that they are complementary and together will represent full control over this policy area.