We are asking the Government to make a statement on record that CLTs are not part of the Voluntary Right to Buy.
The Voluntary Right to Buy goes against the very aim of a CLT to keep homes affordable in perpetuity, risks losing CLT homes as affordable homes and would have a severe dampening effect on the growth of the movement.
Background on the policy
The Conservative Party made a manifesto commitment in 2015 (reiterated in their 2017 campaign) to give tenants in housing association homes the Right to Buy their property.
Implementation of this policy began with the Housing and Planning Act 2016, which set out the legislative framework in Part 4 of the Act. It applies the policy to all Registered Providers, which includes most housing associations and also some CLTs.
In the autumn of 2015, while the Housing and Planning Bill was progressing through Parliament, the National Housing Federation struck a 'voluntary deal' with the Government to implement the Right to Buy policy voluntarily (rather than the detail being written into law).
A pilot with five housing associations was rolled out in the Midlands from April 2016, and a large scale pilot involving most associations in the Midlands with more than 1,000 homes starts in August 2018.
Impact on CLTs
The imposition of a Right to Buy would undercut the statutory purpose of CLTs. The Housing and Regeneration Act 2008 set out a definition of CLTs in Section 79, and requires that they "ensure that the assets are not sold or developed except in a manner which the trust's members think benefits the local community".
The policy could affect CLTs that are RPs, and those that partner with registered Housing Associations. Currently there are nine CLTs that are RPs, several in the process of registering, and at least 45 that have leased homes to another RP.
Homes England makes capital funding for sub-market rental homes conditional on becoming an RP, or partnering with an RP. So many CLTs are understandably nervous about taking up the funding if it exposes them to the Right to Buy.
It could also stymie CLTs that are planning or building new homes. More than half of the approximately 5,000 homes in the pipeline are for rent, and most will either be built by a registered CLT or a CLT partnering with a registered housing association. Many CLTs reported that the threat of Right to Buy was putting landowners off, because they weren't willing to gift or sell discounted land for homes that might not stay in the hands of the local community.
The current position for CLTs
Following successful campaigning by NCLTN and CLTs across the country, CLTs have been granted a limited reprieve from the policy.
First, any CLT that develops through a Community Right to Build order is wholly exempt from the Right to Buy. Very few CLTs have pursued this option, generally because the process to obtain the order can be more burdensome than simply going through the usual planning process.
In March 2016, Baroness Williams of Trafford (then Parliamentary Under Secretary of State for Communities and Local Government) stated in the House of Lords that "housing associations may exercise discretion over sales... where properties are held in a community land trust".
CLTs that are Registered Providers can therefore exercise discretion, and should be able to refer to the statutory definition of CLTs if they are challenged. Terms can be written into tenancy agreements to make clear that the tenant will not be offered the Right to Buy.
The Wessex CLT Project has developed a standard clause in the lease drawn up with housing associations, making clear that the housing association cannot permit tenants of CLT homes to exercise their Right to Buy.
This approach is reflected in the voluntary seal struck by the National Housing Federation in October 2015, following work by the National CLT Network. The offer document made clear that housing associations may exercise discretion over sales of "properties held in a Community Land Trust". It continues that where a housing association exercises this discretion, it would sell an alternative home from its own stock or that of another housing association. We have discussed with the National Housing Federation how associations partnering with CLTs would apply this to ensure tenants might find other homes in their stock that aren't held by CLTs.
So there is discretion for CLTs, and considerable scope to challenge it. To date pilots have excluded all smaller RPs, and housing associations have only been affected if they have opted in. The Government has not yet set a timetable for imposing the "voluntary" policy on all RPs.
However, it is not an iron cast exemption. We are therefore continuing to campaign for a statement on record that CLTs are not part of the VRtB.