Analysis of Responses to the Future of Right to Buy in Scotland Consultation

2: THE NEED FOR MORE CHANGES

Background

2.1 The consultation proposed changes to the right to buy for the following reasons:

• The discounts of up to 70% for tenants with a preserved right to buy cannot be justified.
• It is unfair that some tenants benefit from much larger discounts than others.
• The law in this area is too complicated and difficult to understand for landlords and tenants.
• The right to buy is outdated and out of step with the focus on increasing the availability of affordable housing for those who need it most.

Two key changes were proposed:

• Removing the preserved right to buy entitlement and moving all tenants to the modernised right to buy.
• Ending all right to buy entitlements.

Question 1: Do you agree that further restrictions on the right to buy are needed? Y/N Please give your comments and reasons.

2.2 One hundred and fifty seven (93%) respondents answered this question. The vast majority of these (87%) agreed that further restrictions on the right to buy are needed. Those in agreement included all but one local authority and all of the voluntary groups and 'Others' who provided a view. Significant minorities of individuals (27%) and tenant/resident groups (24%) opposed further restrictions. A breakdown in responses by category of respondent is in Table 2.

Table 2: Q1 responses by category of respondent

Category	Agree		Disagree		Total
	N[4]	%	n	%
Voluntary groups/Charities	6	100			6
Other	3	100			3
Local Authorities	25	96	1	4	26
Registered Social Landlords	55	93	4	7	59
Representative bodies	7	88	1	12	8
Tenant/Resident Groups	22	76	7	24	29
Individuals	19	73	7	27	26
Total	137	87	20	13	157

Reasons in favour of further restrictions on the right to buy

2.3 Two reasons for agreeing that further restrictions on the right to buy are needed dominated responses:

• Demand for social housing outstrips supply leading to long waiting lists for housing and difficulties for social landlords in fulfilling obligations to meet the homelessness legislation. People with need for specific types of property (e.g. people with special needs or those requiring larger properties) are particularly affected. The shortage of supply comes at a time when there is increasing demand for social housing due to the challenging economic climate and welfare reforms. A typical comment was:
  
  'In the current climate of persistent high levels of housing need and limited access to existing social sector stock, plus constrained opportunities for new build, it is counter-productive to retain this legislation' (Argyll and Bute Council).

• The current legislation on right to buy is too complex and further restrictions could exacerbate this. The complexity of the current legislation impacts on costs of administration. One respondent commented:
  
  'Years of tampering with the RTB has left the system complex and confusing. In our Association alone we have 7 categories of RTB' (Cernach Housing Association Limited).

Table 3 overleaf summarises the reasons given in favour of further restrictions on the right to buy.

Table 3: Reasons in favour of further restrictions

Reasons	No. of mentions	% of those in favour
Demand for social housing outstrips supply	77	56
Legislation is already too complex	37	27
RTB has led to fragmentation of estate management leading to difficulties for maintenance and repairs of communal areas/new owners may have difficulty paying for upkeep of their homes	14	10
Discounts are not justifiable	10	7
The public purse should not be funding housing which benefits some people over others	7	5
The different levels of discount create unfairness	7	5
Some families have bought houses for financial gain with the purpose of renting out or selling on	7	5
Need to sustain housing provision for future generations	6	4
Creates difficulty and uncertainties for strategic/business planning	4	3
The RTB is outdated, meeting past needs not current ones	4	3
The demand for RTB is no longer there	1	1

Reasons against further restrictions on the right to buy

2.4 Seven main reasons were cited by those disagreeing with further restrictions on the right to buy. Each was mentioned by five or fewer respondents:

• The restrictions established by the Housing (Scotland) Act 2010 are sufficient along with the decline in interest to buy.
• It is unfair to take away the aspirations of those who have planned to buy their home in the future.
• The right to buy should be available to all.
• The answer is not to restrict, but to build more homes.
• People still want to buy their homes and should be allowed to do so.
• The receipts from right to buy have enabled investment in housing stock and progress towards the Scottish Housing Quality Standard.
• Many tenants were informed that they would retain the right to buy in stock transfers and this should be honoured.

Q2: Do you agree with the proposal to end the right to buy altogether? Y/N

2.5 One hundred and sixty one (95%) respondents answered this question. The vast majority of these (83%) agreed with the proposal to end the right to buy altogether. Ninety two per cent of RSLs and 81% of local authorities agreed that the right to buy policy should end. Eighty per cent of the tenant/resident groups which responded were also in favour of ending the right to buy altogether. Table 4 below provides a breakdown of responses by category of respondent.

Table 4: Q2 responses by category of respondent

Category	Agree		Mixed views		Disagree		Total
	n	%	n	%	n	%
Registered Social Landlords	54	92			5	8	59
Tenant/Resident Groups	24	80	2	7	4	13	30
Local Authorities	21	81			5	19	26
Representative bodies	8	89			1	11	9
Voluntary groups/Charities	5	83			1	17	6
Other	3	75			1	25	4
Individuals	18	67			9	33	27
Total	133	83	2	1	26	16	161

Reasons in favour of ending the right to buy

2.6 Many respondents, predominantly RSLs, simply re-iterated their arguments provided in response to question 1, in particular, that ending the right to buy would stem what they saw as the loss of affordable houses for rent to the private sector. It was argued that retaining properties in the social rented sector would help maintain future investment in new build and attaining Scottish Housing Quality Standards, ultimately leading to more choice of quality stock. Two tenant groups commented that ending the right to buy would provide the opportunity for tenants to have 'the right to rent'.

2.7 Two other common rationales for ending the right to buy were provided by respondents across several sectors:

• This is the simplest, 'cleanest', and easiest option which will remove current complexities, creating a 'level playing field' (Inverclyde Council) for all social tenants; enabling tenants to 'know where they stand' (Albyn Housing Society Ltd).
• The abolition of right to buy will allow for more strategic management of stock and planning of future works along with more informed business planning. One local authority commented:
  
  'Removal of the RTB would give more financial stability to social landlords and greater certainty over their business planning and asset management with the retained stock providing a reliable income stream' (West Dunbartonshire Council).

2.8 Other substantive arguments in favour of ending the right to buy mentioned by only a few respondents (less than 10) were:

• The time is right to end right to buy in terms of reduced demand, difficulties in accessing mortgages, the economic downturn, and the best stock for purchase already gone. One respondent summed up their view:
  
  'RTB sales have declined substantially in the last decade compared with the previous levels. While this will partly be the product of the economic downturn it also indicates that the RTB is a policy whose time has passed. RTB now plays a more marginal role in the overall housing system than it did in the 1980s and 1990s' (Glasgow and West of Scotland Forum of Housing Associations).
• Ending the right to buy is the fairest route to go down as it will remove what some perceived to be the current inequalities in the system between neighbouring tenants holding different rights to buy.
• There are other mechanisms to help people aspiring to buy a home to do so. These include shared ownership schemes and in rural areas, the Rural Home Ownership Grant.

Reasons given against ending the right to buy

2.9 Amongst those against ending the right to buy, seven respondents emphasised their view that the right to buy their own home should not be taken away from tenants. One local authority described this right as:

'a fundamental contractual right which should not be removed altogether despite the pressure on housing supply' (Comhairle nan Eilean Siar).

Four respondents (three of these being tenant/resident groups and the other an individual) commented that ending the right to buy would not in itself create new homes. Other reasons in against ending the right to buy were provided, each by only one respondent:

• Too soon after the 2010 Housing Scotland Act (Ten Gp).
• Will prevent people getting on in their lives (Ind).
• Not fair as some people have already benefitted (Ind).
• The re-sale of ex-RTB properties contributes to the supply of affordable housing (LA).
• It is fair to offer discounts to purchase housing which people have already paid years of rent towards (Ten Gp).

Q3: If right to buy ends, what notice period should be given?

2.10 The consultation document emphasised that should the right to buy be abolished, changes would not be made immediately but a notice period given before any changes are made. This would allow tenants the opportunity to buy their homes under their current entitlements if they chose to do so.

2.11 One hundred and thirty two (78%) respondents specified a notice period which they considered to be appropriate. Almost three-quarters of these (73%) recommended a notice period of two years or less. Table 5 summarises the notice periods suggested by respondents.

Table 5: Summary of recommended notice periods should right to buy end

Notice period	No. of respondents	% of respondents
Immediate - 1 year	50	38
> 1 year - 2 years	46	35
> 2 years - 3 years	24	18
> 3 years	12	9
Total	132	100

2.12 There was no distinct pattern in the categories of respondent favouring shorter or longer lead in periods, although tenant/resident groups were slightly over-represented amongst those recommending longer notice periods.

2.13 One RSL (Paragon Housing Association Limited) urged that whatever notice period is finally decided, it should be made clear whether this timeframe is for completing a RTB purchase or for intimating the intent to buy. Another encouraged the Scottish Government to:

'allow housing associations in Scotland to retain the full receipt of sales until changes of the right to buy come into effect and to continue full retention of the receipt where properties are sold as a result of tenants exercising modernised right to buy if this is the Government's chosen reform' (Scottish Borders Housing Association).

Reasons in favour of a shorter notice period

2.14 The four most common reasons in favour of a shorter notice period were:

• To limit the opportunity for unscrupulous firms and disreputable private landlords buying up stock during the notice period, or family members putting pressure on elderly or other vulnerable people to purchase their homes.
• To limit further loss of social housing to the private sector.
• People have already had ample time to exercise their right to buy.
• The consultation along with the passage of the new housing act should raise awareness that anyone wishing to exercise their right should do so.

2.15 Other reasons provided by three or fewer respondents were:

• To let RSLs get on with strategic planning.
• To prevent a rush in sales.
• Any longer would serve to perpetuate the operation of the right to buy and lead to more complexity and confusion.

Reasons in favour of a longer notice period

2.16 There were two substantive arguments provided in favour of a longer notice period:

• This will help to smooth any panic 'spike' in sales and lessen the risk of people buying without thinking through the longer term implications of costs of upkeep of their property.
• To enable those who have planned to exercise their right, but have been waiting until they are more financially secure or meet the qualifying occupancy period, to exercise their right. For example, one local authority which favoured a five year notice period argued:

'A five year introductory period would ensure that tenants whose tenancy started before the 1^st March 2011 and therefore have the modernised right to buy subject to five years occupation would have the chance to exercise the right. Any Bill ...should consider freezing any accrued discount at that point in time, with no increase in discount during the notice period' (West Lothian Council).

Q4: Do you agree with the proposal to move all those with a preserved entitlement onto modernised terms? Y/N

2.17 The Scottish Government estimates that if tenants with the preserved right to buy were all moved to the modernised right to buy from 2015, sales could be reduced significantly. Depending on the economy and its effect on future house conditions, this reform could mean that an extra 5,000 homes could be kept for renting in the social sector between 2015 and 2020.

2.18 One hundred and twenty six (75%) respondents answered the question on whether they agreed with the proposal to move all those with a preserved entitlement onto modernised terms. A summary of their responses is in Table 6.

Table 6: Summary of views on whether those with a preserved entitlement should be moved onto modernised terms

Response	No. of respondents	% of respondents
Yes	21	17
Yes if RTB is not abolished	34	27
No	68	54
Neither yes or no	3	2
Total	126	100

2.19 The responses to this question are difficult to interpret and should be treated with caution. Of the 68 respondents who disagreed with the proposal, some did so because in their view the right to buy should be abolished altogether. Others, however, disagreed with the proposal because they felt that the right to buy policy should be left alone, with tenants keeping the rights they already have. As it was not possible to identify for all of the respondents the rationale behind their response to this question the data in Table 5 cannot be interpreted fully. It is possible, however, to present the arguments for and against the proposal which respondents documented in their submissions.

Reasons in favour of moving those with a preserved entitlement onto modernised terms

2.20 Those presenting arguments in favour of the proposal were largely RSLs and local authorities. Two main arguments dominated:

• The proposal provides a compromise/balance with benefits both to purchaser and to landlord. Tenants still can aspire to owning their home and purchasing at a discount; landlords will continue to receive receipts from sales.
• The proposal will reduce the complexity which currently exists with right to buy entitlements. One local authority commented:
  
  'This would allow a two tier system of modernised right to buy entitlement or no right to buy entitlement which would be less complex than the current three tier system' (East Dunbartonshire Council).

2.21 Other arguments in favour of the proposal were:

• More equitable between tenants - places them all on the same footing.
• Reduces the number of houses taken out of the social rented sector.
• Starts the process of the gradual phasing out of the right to buy policy.
• Still allows tenants the opportunity to get onto the housing ladder.

Arguments against moving those with a preserved entitlement onto modernised terms

2.22 Of the 68 respondents who stated that they disagreed with the proposal, 30 (spanning six different respondent categories) argued that the right to buy policy should be abolished entirely.

2.23 Four further common arguments against the proposal were:

• Even with this change in entitlement the loss of social rented housing from the sector is unacceptable.
• The proposal will increase the complexity of an already confusing policy. One respondent remarked:
  
  'From a practical perspective, this proposal would still require a great deal of work to establish whether a tenant had a right to buy or not. This task would become even more complex as time passes as more and more tenants would be transferring tenancy and succeeding to tenancies at the same time as new tenants to social housing are beginning tenancies' (Perth and Kinross Council).

• Changing entitlements is not fair on those set to lose current entitlements (this argument prevailing largely amongst tenant groups and individual respondents). One RSL summed up the view of others concerned about breaching commitments made to tenants:
  
  'Our suspension of the modernised right to buy has recently been extended to 2022 and tenants would therefore automatically lose the right which is unfair compared to giving notice' (Rutherglen and Cambuslang Housing Association).

• The proposal would perpetuate inequality or even create more unfairness with some tenants having a right to buy and others having no right to buy. One local authority commented:
  
  'Reduction of the discount may have the effect of increasing inequality by excluding more people on lower incomes from buying their homes without adequately protecting stock levels' (Fife Council).

2.24 Other arguments against the proposal which were made by three or fewer respondents were:

• This would still create uncertainty for landlords' business planning.
• Those who wish to use their right to buy will have exercised this by now so abolition is better than making further changes to the policy.
• The proposed change is undemocratic and possibly not legal.

Q5: If Yes, what notice period should we give for moving everyone onto modernised terms?

2.25 Ninety seven (57%) respondents specified a notice period which they considered to be appropriate. Almost three-quarters of these (74%) recommended a notice period of two years or less. Table 7 summarises the notice periods suggested by respondents.

Table 7: Summary of recommended notice periods for moving everyone onto modernised terms

Notice period	No. of respondents	% of respondents
Immediate - 1 year	37	38
> 1 year - 2 years	35	36
> 2 years - 3 years	19	20
> 3 years	6	6
Total	97	100

2.26 Of the 40 RSLs providing a response, 82% favoured a shorter notice period of two years or less. This contrasts with the 10 tenant/resident groups who responded to this question, half of which recommended a notice period of two years or less, the other half advocating a longer lead in period. Two-thirds (65%) of the local authorities who responded recommended a shorter notice period of two years or less; one third (35%) recommended a period of over two years.

2.27 A recurring theme was that whatever time frame is finally decided, the change should be well advertised, deploying clear and transparent information in language which is easy for tenants to understand.

Reasons in favour of a shorter notice period

2.28 Relatively few respondents documented substantive arguments in favour of a shorter notice period. A summary of their rationales follows:

• Will minimise the potential risk to stock loss.
• Will reduce uncertainty and enable landlords to get on with strategic planning.
• Will minimise the risk of unscrupulous family members and/or lenders to pressurise tenants into purchase.
• Will simplify what is a complex situation as soon as possible.
• Tenants are not losing a right to buy altogether.

Reasons in favour of a longer notice period

2.29 There were two substantive arguments provided in favour of a longer notice period:

• This will help to smooth any panic 'spike' in sales.
• To enable all those who wish to buy prior to the change, time to do so.

Q6: Which option do you prefer - ending the right to buy or moving from preserved to modernised?

2.30 One hundred and forty three (85%) respondents answered this question. Of these, 122 (85%) preferred the option of ending the right to buy. Nine respondents (6%) favoured moving from preserved to modernised entitlements. The remaining 12 respondents (8%)^[5] created another category of 'neither', with several arguing that the original question should have provided a third option of retention of the status quo. Table 8 overleaf summarises the response to this question by category of respondent.

Table 8: Views on which preference of policy option by category of respondent

Category	Ending		Moving		Neither		Total
	n	%	n	%	n	%
Registered Social Landlords	53	93	3	5	1	2	57
Tenant/Resident Groups	21	84			4	16	25
Local Authorities	20	87	2	9	1	4	23
Representative bodies	5	83	1	17			6
Voluntary groups/Charities	5	83	1	17			6
Other	4	100					4
Individuals	14	64	2	9	6	27	22
Total	122	85	9	6	12	8	143

NB Percentages may not add to 100% exactly due to rounding.

2.31 The vast majority of all of the respondent groups except individuals preferred the option of ending the right to buy over moving from preserved to modernised rights.

Reasons in favour of ending the right to buy over moving from preserved to modernised entitlements

2.32 Many respondents stated that they had already provided their views on ending the right to buy in response to earlier questions. However, amongst the arguments re-iterated or summarised, the following prevailed:

• Ending right to buy is the best option to retain stock within the social rented sector. One respondent remarked:
  
  'The consultation document itself seems to make the case for substantial and wholesale reform. Any reform other than outright abolition would not deliver against the essential objective of protecting the stock of social rented housing to meet current and future needs' (South Lanarkshire Council).

• Ending right to buy presents a cleaner and simpler option which will end the current complexity in entitlements.
• Ending right to buy is the better option for promoting equality and fairness amongst tenants. One respondent commented:
  
  '....any variation on complete abolition would maintain an inequitable system with people being able to exercise a 'right' based on nothing more than being fortunate enough to be the tenant of a particular landlord in a particular property in a particular part of the country that doesn't fit into one of the many and convoluted exemptions and exclusions' (Scottish Federation of Housing Associations).

Other arguments were cited by small minority of respondents:

• The right to buy has served its purpose and has little relevance today.
• Ending right to buy will reduce bureaucracy.
• Ending right to buy rather than moving all to modernised entitlements signals a clearer policy message and meets sector expectations.

Reasons in favour of moving from preserved to modernised entitlements over ending right to buy

2.33 Two substantive arguments in favour of moving entitlements rather than ending right to buy altogether were:

• It would be unfair to end right to buy as this was not highlighted in the Housing (Scotland) Act 2010.
• Moving to modernised entitlements would enable a balance between permitting right to buy for those wanting this, whilst reducing stock losses in the social rented sector.

Q7: Do you think there would be any unexpected issues with either option?

2.34 Ninety nine (59%) respondents answered this question.

Unexpected issues arising with the option of ending right to buy

2.35 Two issues were raised most frequently by respondents as potential issues which whilst possibly not unexpected, nonetheless require planning and management:

• surge in sales of housing
• negative reactions amongst tenants and sections of the media.

2.36 Thirty nine respondents identified a surge in sales as an issue which was likely to put pressure on landlord resources to deal with increased numbers of enquiries, whether or not these resulted in completed sales. One respondent commented:

'We know that the volume of applications has declined sharply over recent years and no doubt administration arrangements will have too. Remembering that compliance with timescales is fundamental to the RTB process, it will be important for landlords to make sure that there are staffing resources in place to manage enquiries, investigation, verification, valuation, offers to sell, missives concluding, and so on' (Chartered Institute of Housing Scotland).

2.37 Thirty four respondents considered that tenants might react adversely to this policy change, with some even resorting to legal action to challenge it in court. A few RSLs expressed concern that they would not be able to honour commitments made to their tenants, resulting in them losing the trust of their tenants. For example:

'....transferring tenants to Scottish Borders Housing Association were promised the contractual right to buy under preserved terms at the time of the tenant ballot' (Scottish Borders Housing Association).

2.38 A few respondents, however, suggested that any negative reaction might not be as severe as some envisaged, especially if tenants are given a few years notice of the changes. Examples of comments were:

' ...as an RSL which has recently consulted tenants regarding an extension of the exemption of RTB for a further 10 years and had this approved, although there were some negative comments.. all understood the reasons behind the application for extension of the exemption and did not oppose it' (East Kilbride and District Housing Association).

'It is important to remember that what is being proposed is the removal of a right previously granted by statute and that if removal is the preferred option, the change would not remove a tenant's right to a home' (HBJ Gateley).

2.39 Another potentially unexpected issue identified by ten respondents was that of pressure placed on tenants by financial lenders, family members or others to act quickly, raising the possibility of rushing into buying their home without taking into account the longer term financial implications of upkeep and mortgage payments (which may rise). It was argued that this in turn could lead to an increase in waiting lists for social rented housing, or mortgage to rent applications, as new owners find their finances are stretched and turn back to the sector for assistance. One respondent argued that this would be a particular problem for:

'tenants who are financially on the border-line between renting and buying' (Paragon Housing Association Limited).

2.40 Ten respondents, largely tenant/resident groups, identified a decline in standards of housing as a potentially unexpected issue over the longer term. They highlighted a few reasons for this:

• lack of landlord capital receipts to reinvest in the current stock
• tenants without aspirations to own their own homes may not look after their property as it will always be owned by someone else
• more people will have bought hastily without being able to afford the upkeep of their property.

2.41 One respondent (Ten Gp) argued however, that an increase in maintenance standards may gradually ensue as the ending of the right to buy would stem the sales of properties to people who cannot afford their upkeep.

2.42 Eight respondents reiterated concerns expressed previously that the potential spike in sales which could result in an announcement of the ending of the right to buy would lead to a further loss of social rented stock. Others, however, argued that the current lack of available mortgage finance could limit this effect.

2.43 Further potentially unexpected issues raised by 5 or fewer respondents were:

• There will be need to develop and expand alternative schemes to supporting low income families into the property market, for example, people with disabilities who are more likely than others to be living in poverty.
• There may be job losses amongst those who process right to buy sales and those who are involved in valuing social rented properties for sale.
• Inconsistencies will need to be addressed such as that between the policy situation in England and Wales and Scotland; the differences between individual right to buy and sales to communities of interest.
• There may be a benefit in terms of greater mobility between properties as older people are able to downsize to smaller properties without the pressure of retaining oversized homes in case of a future wish to buy within their family.
• There could be a short term increase in income for landlords from sales of property bought before the deadline for ending right to buy.

Unexpected issues associated with the option of moving from preserved to modernised right to buy

2.44 Twelve respondents from a range of different sectors cautioned that implementing this option could result in much confusion amongst tenants and indeed staff processing right to buy applications. It was suggested that this could result in a need for increased staff training and also a demand for the Scottish Government to produce additional guidance for landlords. One respondent outlined areas of potential confusion and possible resistance:

'Transferring tenants from the preserved RTB to the modernised version is not straightforward when applied to housing associations and co-operatives. A range of exemptions currently apply to the modernised RTB in certain organisations, either because of charitable status, the ten year RSL exemption, or because their stock has local authority designated Pressured Area Status. If those with preserved RTB are transferred onto modernised RTB in any of these scenarios then that RTB, under current rules, would either be suspended or ended completely' (Scottish Federation of Housing Associations).

2.45 One concern amongst a few respondents was that tenants might perceive this option to be a way of ending right to buy, 'by the back door' which could attract an adverse reaction.