Many housing associations have charitable status so this amendment outlines the fact a charity’s assets must be used to serve the institutional purpose and restates the fact charities should not be compelled to sell assets where it runs counter to their purpose. Members of the House of Lords voted in favour of the amendment by 257 to 174.
Presenting the argument for an amendment to the Charities Bill, Baroness Hayter of Kentish Town explained that the sale of assets from a charity’s portfolio would have a ‘considerable impact on the viability and its shared values and resources’. For these reasons, she said it was vital the debate took place on the Charities bill and was not delayed when the Housing bill came to parliament.
The extension to Right to Buy was included in the Queen’s speech in May, confirming plans to allow more social housing association tenants to purchase their home, with discounts of as much as £103,900.
Speaking in the House of Lords, chair of Peabody housing association and president of the Local Government Association Lord Kerslake, said while he was in favour of the government’s aim of extending home ownership, he had ‘serious concerns’ about the proposed route.
“Under the Government’s current proposals to extend Right To Buy, all properties would be open to purchase and the available discount of up to £104,000 on a flat after three years’ occupation would be much greater. That would include significant numbers of properties built with absolutely no contribution from government.”
Kerslake also raised concerns that the Right to Buy policy could be exploited with properties used as buy-to-let investments.
“Given that the average value of a Peabody property is over £350,000, it is likely that, even with the discount, sales will be to the better-off residents. Experience from local authority sales through Right To Buy is that, over time, substantial numbers of the properties are sold off, so that one-third of the homes become buy-to-let properties at market rent. These can be as much as double social rents, and so not accessible to low-income families, as was originally intended,” he added.
“If the policy is pursued in its current form, it will be contrary to the charitable intent of Peabody and housing associations like it.”
The final version of the Charities bill must be passed through the House of Commons to consider amendments before going back to the House of Lords for a final reading, a process that can result in a ‘ping pong’ effect between the Houses.