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212436 2 28/05/12
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The Future of Right
to Buy
in Scotland
A consultation
Join us at
http://www.facebook.com/righttobuyscotlandconsultation
Ministerial Foreword
Our vision for housing is that all people in Scotland live in a high-quality,
sustainable home that they can afford and which meets their needs.
That is why I think it is important to do everything possible to protect and
increase the supply of affordable housing. One way we can help to do
this is by reforming the right to buy. We recognise that many people
choose to rent their homes, while for others renting is their only option.
We want to do everything possible to make sure that they, and future
generations of families, have access to affordable rented housing. That
is one reason why we are committed to providing 30,000 affordable
homes in the lifetime of this Parliament, of which two thirds will be in the
social rented sector.
In our last Parliamentary term, we successfully introduced important
changes. By ending right to buy for new tenants and new-supply houses
we have already gone some way to protecting social housing from right
to buy. These changes are already bearing fruit as social landlords are
building new houses safe in the knowledge they will not be subject to the
right to buy.
We are now consulting on further proposals. We do not believe that the
discounts of up to 70% available to people on the ‘preserved’ right to buy
can be justified. I think these large discounts are unfair to landlords
financially and on other tenants who have smaller discounts.
One change we could introduce is to move people who have a
preserved right to buy entitlement onto the ‘modernised’ right to buy,
which has a smaller discount. Another possibility is to end the right to
buy altogether, which would remove the complexities of the current
legislation, whilst protecting both current and future housing stock for
generations to come.
This does not mean that we are against home ownership. On the
contrary, I know that many people want to own their own home and
there are a range of initiatives in place to encourage low cost home
ownership for first-time buyers. We believe that it is important for
Scotland to have vibrant communities with a mixture of housing tenures.
Under devolution we can make many decisions on housing policy, in the
best interests of the Scottish people. As a result we already have a
strong housing sector here in Scotland. The high level of devolution in
2
the housing sector has allowed the Scottish Government to create a
distinctively Scottish product, targeted at the needs of the Scottish
people. Transfer of greater powers in areas such as taxation, welfare,
energy and regulation present an opportunity for further targeted
support. Our freedom to make decisions in all areas of our lives that
allow Scotland to flourish economically and socially is the core question
to be decided in the referendum we are proposing to hold in 2014.
I know that right to buy is something many people feel strongly about.
That is why we look forward to hearing from tenants, prospective
tenants, equalities groups, social landlords and everyone who wants to
have their voice heard on this important issue.
Keith Brown MSP
Minister for Housing and Transport
3Contents
page
1. Introduction 5
2. Background 6
3. The need for more changes 7
4. The financial effect on landlords 11
5. Other changes 12
6. Assessment of equal opportunities 14
7. Business and Regulatory Impact Assessment 15
8. Summary of consultation questions 16
9. How to tell us what you think 18
10. How we will use your response 19
Annex A Partial Equalities Impact Assessment 20
Annex B Partial Business & Regulatory Impact Assessment 30
Annex C List of organisations consulted 35
41 Introduction
1.1 The purpose of this paper is to consult on the reform of right to buy laws in
Scotland. In our strategy and action plan, ‘Homes Fit for the 21st Century: The
Scottish Government's Strategy and Action Plan for Housing in the Next Decade:
2011-2020’
http://www.scotland.gov.uk/Publications/2011/02/03132933/0
we said the following.
“To strengthen the social housing sector, we have already acted to remove
the right-to-buy (RTB) for new homes and new tenants, and we will take
action to further restrict the RTB. While the RTB has provided new options for
households over the last 30 years, the costs of this policy will now fall on
future generations. The transfer of hundreds of thousands of properties out of
the social housing sector has decreased our social housing stock, and placed
increasing pressures on councils and housing associations. It has also had a
profound and detrimental effect on some communities, with less desirable
areas now even more marginalised. At the same time, many of those who
exercised their right-to-buy have struggled to meet the costs of home
ownership.
The discounts of up to 70% under the "preserved" (pre-2002) right-to-buy
scheme are unjustifiable. They leave social landlords out of pocket, leading to
pressures on rents for remaining tenants and an eroded asset base. Under
current legislation, some 207,000 tenants still have the preserved right.
These discounts are excessive in comparison with the lesser discount under
the "modernised" RTB.“
1.2 In this strategy, we said that we would consult on ways to reform the
preserved right to buy, to make it fair for both tenants and landlords, and that is what
we are now doing. As part of this consultation we are also taking the opportunity to
gather people’s views on other changes that could be made to existing laws, as well
as the option of completely removing all entitlements to the right to buy in Scotland.
1.3 Any right to buy reforms will be included as part of the next Housing Bill.
1.4 For information on current right-to-buy legislation, tenants and other interested
members of the public may find it helpful to refer to our guidance booklet, ‘Your
Right to Buy Your Home: a Guide for Scottish Secure Tenants’ while landlords can
refer to our guidance circular. Both are available on the website,
http://www.scotland.gov.uk/rtb
52 Background
2.1 Right to Buy was introduced in 1980 but in its current form the basis is the
Housing (Scotland) Act 1987 ('the 1987 Act'), which was later amended by the
Housing (Scotland) Act 2001 ('the 2001 Act') and the Housing (Scotland) Act 2010
(’the 2010 Act’). There can be exceptions in particular cases, but, in general terms,
the changes made by the 2001 Act were introduced in a way that 'preserved' the
entitlements of existing tenants and introduced 'modernised' entitlements for new
tenancies that started on or after 30 September 2002. The 2010 Act kept existing
entitlements, but ended the right to buy for new tenants, those returning to the sector
after a break, and for new supply houses. We have summarised this below.
'Preserved' right-to-buy entitlements
2.2 Tenants who have right-to-buy entitlements over their current home from
before 30 September 2002 can buy after a two-year qualifying period with a ‘relevant
landlord’ (generally a local authority or registered social landlord). For houses, the
discount starts at 32% of the market value, rising by 1% a year up to 60%. For flats,
the discount starts at 44% of the market value, rising by 2% a year up to 70%.
'Modernised' right-to-buy entitlements
2.3 Tenants who gained the right to buy between 30 September 2002 until 1
March 2010 have the right to buy after a five-year qualifying period with a ‘relevant
landlord’. The modernised discount starts at 20% of the market value after those five
years and rises by 1% a year for all house types, up to 35% or £15,000, whichever
is lower. In over half of all sales using the modernised entitlement, the maximum
discount of £15,000 applies. Some tenants cannot use the modernised right to buy if
they live in an area or type of home that has been classed as ‘pressured’ or if they
are the tenants of registered social landlord (RSL) affected by a ten-year suspension
from the right to buy. The suspension generally affects RSLs which are non-
charitable or which became charities after 18 July 2001 Tenants with preserved right
to buy are not currently affected by these suspensions. However, if the proposal to
move them on to modernised right to buy is adopted, the suspension would then also
apply to them.
No right-to-buy entitlement
2.4 From 2 March 2011, the 2010 Act ended the right to buy for new tenants and
those returning after a break. From 1 March 2011, it also ended for new supply
houses (those built or acquired after 25 June 2008). It did not remove any existing
entitlements. Existing tenants moving to a new-supply home cannot buy that home.
However, they do keep the right to buy if they then move to a home that is not new
supply. The act also changed the ‘pressured area’ rules. This means that from 30
June 2011 local authorities rather than Scottish Ministers can decide (designate) if
an area is pressured. They can make the designation for up to 10 years, and can
choose types of homes as well as areas.
2.5 It was already the case that some tenants of social landlords had no
entitlements to the right to buy (for example, if they live in a group housing scheme
6such as sheltered housing). We propose that existing exemptions and limits stay in
force as they currently stand unless any of our proposals to reform them are adopted
or, indeed, we decide to end the right to buy in Scotland altogether.
2.6 You can find out about all factors that may affect a tenant's entitlement in
sections 61 to 84A of the 1987 Act.
http://www.legislation.gov.uk/ukpga/1987/26/part/III/crossheading/right-to-buy
3 The need for more changes
3.1 Since the right to buy was introduced, around 455,000 properties have been
bought using the scheme. It has been a big contributor to the change in the number
of homes being owned in Scotland in that period. 65% of Scottish homes are now
owner-occupied.
3.2 While the right to buy has extended the benefits of home-ownership to many
families and has helped to create communities that are more mixed, it has removed
properties from the social rented sector and severely reduced the number of homes
available to rent from social landlords (such as councils and housing associations).
On 31 March 2010, there were 397,438 people on local-authority and housing-
association waiting lists. These lists contain a certain percentage who have been
counted twice because people may be on more than one list, but this nevertheless
shows that there is a high demand for affordable rented housing. As a result, those
on the waiting lists often have to wait longer for properties to become available.
3.3 As well as meeting the needs of those on the housing list, local authorities
also have responsibilities for housing homeless people. There were 55,227
homeless applications in the financial year 2010 to 2011. Local authorities have to
provide temporary accommodation while they investigate the circumstances of those
who are applying as homeless. They also have to provide accommodation for a
reasonable period to an applicant who has a non-priority need or is intentionally
homeless. In the three months to 31 December 2011 there were 10,685 households
in temporary accommodation.
3.4 We recognise that many people want to own their homes but we do not
believe that this should be at the expense of homes in the social rented sector. We
are committed to supporting home ownership in other ways by helping people on low
to moderate incomes to become home owners (if it is affordable for them). Our
Low-cost Initiative for First Time Buyers (LIFT) brings together several ways to help
households become homeowners.
http://www.scotland.gov.uk/Topics/Built-Environment/Housing/BuyingSelling/lift
3.5 We want more changes for the following reasons:
We cannot justify the discounts of up to 70% for tenants with a preserved right
to buy. If we keep the right to buy, we aim to move all tenants on to the more
reasonable ‘modernised’ discount. We estimate that around 49% of tenants of
local authorities have a preserved right, which works out at around 149,000
7households. For tenants of registered social landlords, it is estimated to be
58,000 (22%).
It is unfair that some tenants benefit from much larger discounts than others.
The law in this area is too complicated and it is difficult to understand for
landlords and tenants.
The right to buy is outdated and may have no place in today’s Scotland with
our focus on increasing the availability of affordable housing for those who
need it most.
3.6 We have assessed how possible further changes to the right to buy might
affect the number of sales in the future. Chart 1 shows the number of homes in the
social sector sold under right to buy since 1979-80. Sales fell from their peak in
1989-90, with a slight rise in 2002-03. This reflects a surge before modernised
entitlements were introduced. Sales have been falling mainly because most tenants
who want, and are able, to buy have already done so. There are currently only
around 2,000 right-to-buy sales each year in Scotland. If we keep the right to buy,
the limited availability of mortgages resulting from the credit crunch, the less
generous modernised entitlements and the various suspensions and pressured
areas are likely to further reduce the level of sales over the short term.
Chart 1
RTB sales in Scotland between 1979-80 and 2010-11
35,000
30,000
25,000
Number of sales
20,000
15,000
10,000
5,000
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19 80
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79
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Year
Source: Housing Statistics Branch, Scottish Government.
3.7 We estimate that there are still around 534,000 tenants with a right-to-buy
entitlement. Of these, 207,000 have the preserved right to buy and 327,000 have the
8modernised right to buy. At a time when council house building is delivering much
needed new homes, it is important to make sure that local authorities can keep hold
of their existing stock. Based on the number of sales in 2010-11, there could be up to
20,000 sales in the period 2012-2022 if the current policy on the right to buy does not
change.
The effect on stock of removing the preserved right-to-buy entitlement and
moving all tenants to modernised RTB
3.8 We estimate 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 housing conditions, this reform
could mean we keep up to an extra 5,000 homes for renting in the social sector
between 2015 and 2020. This calculation is based on a reduction in the sales rate
for those who had preserved terms, assuming they would be less likely to buy under
modernised terms. It assumes no change in the sales rate for those on modernised
terms, so the properties saved all come from those currently on preserved terms.
The effect on housing if we end all right-to-buy entitlements
3.9 Based on sales of 2,025 in 2010-11, if we ended the right to buy in 2015, we
could keep up to 10,000 houses in the social rented sector, which would otherwise
be sold over the five-year period from 2015 and 2020. Overall there are 534,000
tenants in the social rented sector who have an entitlement under current right-to-
buy rules. So, if we ended right to buy, we could protect around 528,000 properties
(taking into account those which would be sold between now and 2015).
Timing of the proposed changes
3.10 We would not put any changes into practice immediately. We would aim to
give a notice period before either of the policy options became effective. This would
allow tenants the opportunity to buy their homes under their current entitlements, if
they chose to do so.
Questions
1. Do you agree that further restrictions to the right to buy are needed? Y/N
Please give your comments and reasons.
2. Do you agree with the proposal to end the right to buy altogether? Y/N
3. If so, what notice period should we give?
Two years Three years Five years Other
4. Do you agree with the proposal to move all those with a preserved
entitlement onto modernised terms? Y/N
95. If Yes, what notice period should we give for moving everyone onto
modernised terms?
Two years Three years Five years Other
6. Which option do you prefer – ending the right to buy or moving from
preserved to modernised?
Please give your comments and reasons.
7. Do you think there would be any unexpected issues with either option?
Y/N
If Yes, please explain these.
104 The financial effect on landlords
4.1 Most money generated by homes sold under the right to buy in Scotland is
held by social landlords. A small percentage of this money is returned to us as a
result of stock transfers and we use it to fund new social housing. Social landlords
tend to use the money from right-to-buy sales to pay off debts or pay for
improvements to existing stock which need work to meet the Scottish Housing
Quality Standard (SHQS) in 2015, or for new-build programmes. Scottish local
authorities can keep all the money they get from selling right-to-buy homes, set their
own rents, and, in general, have flexibility about how they arrange their housing
finances.
4.2 Both of the proposed changes would have a significant financial effect on
social landlords, particularly local authorities. The main effect over the short term
would be a fall in income from selling homes. However, over the longer term, there
would be continuing rental income from properties that they might otherwise have
sold. Ending the right to buy altogether would reduce funding to local authorities by
around £50 million a year (based on £48 million received from right-to-buy sales in
2009 to 2010). However, this would be compensated (at least partly) by the
continued rental income over the longer term. In some cases, this could give more
rental surplus to borrow against for new housing than the money received from
sales. We explain this more fully in paragraph 4.4 below.
4.3 Restricting or ending the right to buy may also reduce landlords’ overall costs
by helping them to manage their stock better. It may help with problems meeting the
Scottish Housing Quality Standard in blocks of flats with a mix of tenants and owner-
occupiers as some owners may refuse to pay for upgrades and repairs.
4.4 When a home is sold under the right to buy, the landlord receives a ‘capital
receipt’, less the right-to-buy discount. However, if the home is not sold, the landlord
will receive the rent from the home, less the costs of maintaining and managing it.
This is known as the rental surplus. Since rents in the social sector are below market
levels, whether this rental surplus is worth more or less than the capital receipt will
depend on:
how large the right-to-buy discount is;
how much below the market level the rents are; and
the level of the management and maintenance costs.
To give us an idea, if we look at information we have collected, we can see that
under the preserved right to buy, with its generous discounts, the landlord is likely to
be in a better financial position if a home stays part of its stock rather than being
sold. In contrast, under the less generous discounts of the modernised right to buy,
the sales income may realistically be more than the net rental surplus, and there
would be no financial advantage for landlords in keeping the property. Putting these
two conclusions together, if we ended the preserved and modernised right to buy,
since most sales take place under the preserved right to buy, the overall financial
effect is likely to be at least neutral, and possibly in favour of the landlord.
4.5 In summary, we believe that either of our proposed changes would provide
improved ability for landlords to manage their assets, and provide a financial
11incentive to build new homes. This would be due to greater certainty over which
properties can or cannot be sold under right to buy. There would be a more
predictable revenue stream, giving landlords greater confidence to borrow over the
long term. We know that social landlords use some of the income from right-to-buy
sales to pay for improvements to existing stock. Using the information we have, we
can say that neither of the proposed changes would have a negative effect on social
landlords' ability to invest and that the uncertainty associated with current economic
conditions is likely to have a much more significant effect in comparison. We have
no plans to change existing arrangements for voluntary sales.
4.6 Because there is such a difference in the ability to invest among social
landlords, we are keen to hear their views on how both the proposal to move to
modernised right to buy and the proposal to end right to buy would affect them.
Questions
8. What financial effect would our proposed changes have on social
landlords, particularly over the longer term?
9. What steps could landlords take to reduce any negative effects?
5 Other changes
5.1 If we decide to keep the right to buy and move all existing tenants with a
preserved right to buy onto modernised terms, there are opportunities for more
changes. We have set out some of these below.
Repeal section 69 and make all ‘amenity houses’ exempt from the right to buy
5.2 Section 69 of the 1987 Act allows landlords to refuse to sell (if the Scottish
Ministers have given their authorisation) homes provided for tenants of pensionable
age who have special needs which a tenant would otherwise be entitled to buy.
These homes have to be substantially different from normal houses. The wording of
this legislation is difficult to apply in a modern housing context, where even
‘pensionable age’ is a less certain phrase. It means that Scottish Ministers are
responsible for making decisions on what is or is not an amenity house. We also
make a judgement on whether a home has been adapted specifically for a person of
pensionable age or merely for a disabled person of any age. It does not state what
should happen if the tenants have made adaptations to the home or if landlords have
provided the adaptations but the tenants have removed them. As more new homes
are being built, many of the features that would previously have been ‘substantially
different’ are now standard, making this judgement increasingly difficult. With
technological change, warden-centred groups of sheltered housing have become
less common, and there is increased focus on maintaining mixed communities and
supporting elderly people to live independently. The standard design of properties
now increasingly makes them suitable for elderly disabled people without any
specific adaptations, for example by designing properties without steps and wider
door spaces. This means that the focus of section 69 on the design or adaptations
of a property for people of pensionable age makes it difficult to operate.
125.3 We want to repeal (withdraw) section 69. We could then allow landlords to
decide which homes should be exempt from the right to buy because they are
needed for elderly tenants with special needs. This would be consistent with our
decision to delegate the decision-making on ‘pressured areas’ to local authorities. It
would also be in line with the policy to further restrict right-to-buy sales. As happened
with pressured areas, we could give landlords guidance on designating amenity
houses.
Questions
10. Do you support the proposal to repeal section 69 and delegate decision-
making to landlords? Y/N
Please give your comments and reasons.
Extend the 10-year suspension
5.4 The 2001 Act extended the right to buy to all tenants with Scottish secure
tenancies of non-charitable registered social landlords (RSLs) and those RSLs which
became charities after 18 July 2001. The act also allowed for this right to be
suspended for 10 years from 30 September 2002. We estimate that 23,000
tenancies are affected. The 10-year suspension ends on 30 September 2012.
Section 61A of the 1987 Act (as amended) allows RSLs to apply to Scottish Ministers
for the suspension to be extended for another 10 years. We expect most of the
affected RSLs to apply. There is no limit to the number of extensions RSLs can
apply for in future, as long as they apply before any period of suspension ends.
5.5 We are considering including a proposal that would make the current
suspensions permanent, while still keeping the condition that allows RSLs to remove
any suspension. The current situation may give tenants unrealistic expectations of
being able to buy their homes after a period of suspension ends when, in fact,
landlords may continue to apply for an extension of a suspension beyond September
2012 and even beyond any extended date. Tenants, although they have the right to
buy, may, in practice, never be able to use it. To end this uncertainty for tenants,
options might be either to put in place a blanket suspension for all RSLs from a
particular date, unless any RSL wanted its tenants to have the right to buy, or simply
to end the right to buy altogether for the stock affected.
5.6 The 10-year suspension applies to most homes let by these RSLs but it does
not apply to tenancies of most homes built by RSLs after 30 September 2002. The
2001 Act meant these homes would be covered by the right to buy. However,
because of the ‘cost-floor rule’ they could not be sold at a discount which made
buying a less attractive option. The cost-floor rule is where a landlord can state a
minimum selling price if they have built, bought or spent at least £5,000 on repairs or
improvements in the last 10 financial years. As the ‘cost-floor rule’ will no longer
apply after 10 years, these homes can be sold at a discount from 1 April 2013. This
may increasingly mean that a suspension would not be effective as RSLs may have
built a significant number of homes after that date. As a result, we are also
considering whether homes built after 30 September 2002 should be included within
any long-term suspension described above. However, this would mean that tenants
13of RSLs would not have a right that those in local-authority housing would continue
to have.
Questions
11. Do you have any views on the 10-year suspension and possible future
changes?
Other issues
5.7 The law around the right to buy is complicated and our aim is to clarify it as far
as possible. Ending the right to buy altogether would, of course, achieve this aim.
However, if we decide to move all tenants to modernised right to buy, this should still
help to simplify the right-to-buy rules. It would help us if you could identify any other
problems, issues or inconsistencies that have arisen with current rules.
Questions
12. Are there any other right-to-buy issues which you think should be
tackled? Y/N
Please give any comments.
6 Assessment of equal opportunities
6.1 The public-sector duty in terms of equal opportunities says that we must
consider equality in everything we do.
6.2 The Equality Impact Assessment (EQIA) allows us to consider how our
policies may affect, either positively or negatively, different sectors of the population
in different ways.
6.3 We would appreciate your views on the effect, in terms of equal
opportunities, you think our proposals may have on different sectors of the
population. We have attached a partial EQIA to this consultation for your comments
and feedback. You can find a copy in Annex A.
Questions
13. What groups do you think would be affected – positively or negatively –
by the proposed reforms?
14. What could we do to avoid any negative effect?
15. Do you have any comments on the partial Equalities Impact
Assessment?
147 Business and Regulatory Impact Assessment
7.1 All policy changes, whether European or domestic, which may affect
businesses or the voluntary sector should be accompanied by a Business and
Regulatory Impact Assessment (BRIA). The BRIA allows policymakers to use
available evidence to find proposals that best achieve the policy aims while reducing,
as far as possible, costs and burdens. Through consultation with businesses, we can
analyse the costs and benefits of the proposed legislation. It also makes sure that
any effect on business is fully considered before regulations are made. We have
prepared a partial BRIA as part of this consultation and you can find a copy in Annex
B.
Questions
16. Do you have views on the effect these proposals may have on your
business?
17. Do you have any comments on the partial Business and Regulatory
Impact Assessment?
158. Summary of Consultation Questions
1. Do you agree that further restrictions to the right to buy are needed? Y/N
Please give your comments and reasons.
2. Do you agree with the proposal to end the right to buy altogether? Y/N
3. If so, what notice period should we give?
Two years Three years Five years Other
4. Do you agree with the proposal to move all those with a preserved
entitlement onto modernised terms? Y/N
5. If Yes, what notice period should we give for moving everyone onto
modernised terms?
Two years Three years Five years Other
6. Which option do you prefer – ending the right to buy or moving from
preserved to modernised?
Please give your comments and reasons.
7. Do you think there would be any unexpected issues with either option?
Y/N
If Yes, please explain these.
8. What financial effect would our proposed changes have on social landlords,
particularly over the longer term?
9. What steps could landlords take to reduce any negative effects?
10. Do you support the proposal to repeal section 69 and delegate decision-
making to landlords? Y/N
Please give your comments and reasons.
11. Do you have any views on the 10-year suspension and possible future
changes?
12. Are there any other right-to-buy issues which you think should be tackled?
Y/N
Please give any comments.
13. What groups do you think would be affected – positively or negatively – by the
proposed reforms?
1614. What could we do to avoid any negative effect?
15. Do you have any comments on the partial Equalities Impact Assessment?
16. Do you have views on the effect these proposals may have on your business?
17. Do you have any comments on the partial Business and Regulatory Impact
Assessment?
179 How to tell us what you think
9.1 The closing date for responses is Thursday 30 August 2012.
9.2 You may want to respond to all of the questions or only to some of the
questions that interest you. We are happy for you to do either of these.
9.3 We need to know how you want us to handle your response and, in
particular, whether you are happy for your response to be made public. Please fill in
the respondent information form at the beginning of the questionnaire as this
will make sure that we treat your response in the way you ask. If you ask for your
response not to be published, we will treat it as confidential.
9.4 Please download a word version of the respondent information form and
questionnaire at www.scotland.gov.uk/consultrtbscotland and email to
rtbconsultation@scotland.gsi.gov.uk
Or, fill in a hard copy and send to:
Lesley Dyker
Housing Supply Division
Scottish Government
Johnstone House
50-54 Rose Street
Aberdeen, AB10 1UD
9.5 You can also get involved in the consultation through Facebook at
www.facebook.com/righttobuyscotlandconsultation
9.6 If you have any questions about responding to the consultation, please
contact rtb@scotland.co.uk or call 0141 305 4086.
9.7 If you give permission for your response to be made public, and after we have
checked that it contains no material which could damage someone’s reputation, we
will make the response available to the public in the Scottish Government Library by
21 September 2012 and online by 27 September 2012. You can make arrangements
to see the responses by contacting the SG Library on 0131 244 4552 or by visiting
http://sglibraryservices.wordpress.com/. We can also copy them and send them to
you. However, we may charge you for this service.
9.8 Please be aware that we are governed by the Freedom of Information
(Scotland) Act 2002 and so would have to consider any request made to us under
the act for information relating to responses made to this consultation exercise.
1810 How we will use your response
10.1 Following the closing date, we will consider all responses, along with any
other available evidence, as part of the final process to decide whether the proposed
schemes are suitable for approval.
10.2 We will aim to issue a report on this consultation process by the end of
September 2012.
10.3 If you have any comments about how this consultation exercise has been
carried out, please send them to rtb@scotland.gsi.gov.uk.
10.4 You can see this consultation, and all our other consultation exercises, online
on the consultation web pages of our website at
http://www.scotland.gov.uk/consultations.
10.5 We have an email alert system for consultations,
http://register.scotland.gov.uk. This system allows individuals and organisations to
register and receive a weekly email containing details of all new consultations. It is
designed to allow you to keep up to date with all our consultation activity. You can
then find out, as early as possible, about those consultations which interest you. We
would encourage you to register.
19Annex A
Partial Equalities Impact Assessment
Policy title: Right to Buy reforms.
Which national outcome(s) does the policy contribute to?
“Our public services are high quality, continually improving, efficient and responsive to
local people’s needs.”
And
“We have strong, resilient and supportive communities where people take responsibility
for their own actins and how they affect others.”
What is the purpose of the policy (or changes which are to be made to the
policy)?
The consultation on further reform of Right to Buy (RTB) considers two significant
options for further restricting right to buy in Scotland. These include ending RTB
altogether or retaining it but with a more modest maximum discount of £15k for all those
entitled.
The principal policy objective of these reforms is to safeguard social rented properties
so that they are available to tenants for rent over the lifetime of the properties.
Ending RTB
If implemented from 2015, the Scottish Government estimates, for the period from 2015
to 2020, that the reforms would retain in the social housing sector up to 10,000 houses
that otherwise would be lost through RTB.
Moving preserved tenants onto modernised terms
If implemented in full from 2015, the Scottish Government estimates, for the period from
2015 to 2020, that the reforms would retain in the social housing sector around 5,000
houses that otherwise would be lost through RTB.
The Scottish Government recognises that RTB has brought certain advantages. It has
extended the benefits of home ownership to many tenants and has helped to create
communities that are more mixed. The principal negative consequence of RTB is that it
removes properties from the social rented sector and so reduces the number of
properties available for social rent. This in turn generally means that prospective
tenants, many of whom are homeless, must wait longer for properties to become
available. The RTB reforms aim to re-balance tenants’ home ownership aspirations with
the needs of prospective tenants whose housing needs may be best met through social
rented accommodation.
If we decide to take forward the option which reduces the RTB discount there are also
other proposals we are considering as part of the formal consultation.
20Repeal of section 69 of the 1987 Act.
Section 69 permits landlords to refuse to sell, with the Scottish Ministers’ authorisation,
houses provided for tenants of pensionable age with special needs which a tenant
would otherwise be entitled to buy. These houses have to be substantially different from
normal houses. The current legislation puts the onus on Scottish Ministers to make
decisions on what is or is not an amenity house and make a judgement on whether a
house has been adapted specifically for a person of pensionable age. As more new
homes are being built, many of the features that would previously have been
‘significantly different’ are now standard, making judgement increasingly difficult.
Standard design of properties now increasingly makes them suitable for older disabled
people without adaptation, for example by designing properties without steps and wider
door spaces. This means that the focus of section 69 on design or adaptation for
occupation by people of pensionable age makes it difficult to operate. We are
considering repealing section 69 and allowing landlords themselves to decide which
houses should be exempt from RTB because they are needed for older tenants with
special needs.
Extend 10 year suspension
The 2001 Act extended RTB to all tenants with Scottish secure tenancies of non-
charitable RSLs and those RSLs which became charities after 18 July 2001. It also
provided that the introduction of this right was suspended for ten years from 30
September 2002. We estimate that 23,000 tenancies are affected. The 10-year
suspension ends on 30 September 2012. Section 61A of the 1987 Act provides that
RSLs can apply to Scottish Ministers for the suspension to be extended for a further
period of up to 10 years. We expect most of the affected RSLs to apply. There is no
limit to the number of suspensions RSLs can apply for in future, as long as the
application is made before any period of suspension ends.
We are considering including a proposal that would make the current suspension
permanent, while retaining the provision that allows RSLs to give notice that they want
to end it.
The 10 year suspension applies to most houses let by these RSLs but it does not apply
to tenancies of most houses built or acquired by RSLs after 30 September 2002. We
are also considering whether houses built after 30 September 2002 should be included
within any long term suspension described above.
Who will be affected?
Social landlords (local authorities and Registered Social Landlords) and their tenants
will be affected by these reforms.
Tenants holding a Scottish secure tenancy (SST) from a social landlord which began
before 1 March 2011 generally have some form of RTB entitlement, although there are
some exemptions and limitations. This gives tenants the entitlement to purchase the
property they are renting at a discount.
These reforms would aim to provide benefits for current and future tenants of social
landlords by improving the availability of social housing for rent. Specifically, the
21reforms would benefit:
• prospective tenants by reducing the time they spend on waiting lists; and
• current tenants by increasing their options for transferring to a new tenancy.
Social landlords would also benefit from the reforms by retaining more of their stock.
The reforms should help local authorities better to plan to meet local housing needs as
it will give them more certainty about which properties should be available for social
rent over the lifetime of the properties.
Although social landlords' income from RTB sales will be reduced as a result of the
reforms, this should not be significant and should be offset by continued rental income.
Social landlords will still be able to sell properties should they wish to using existing
powers.
The assessment process
We have analysed existing evidence to inform this partial EQIA.
As part of the formal consultation on the reforms, we will hold specific workshops and
meetings with equality stakeholders. We have included questions on the EQIA and the
equality implications of the proposals within the formal consultation.
Information gathered during the consultation will help to inform the final EQIA.
22Gathering and Analysing the Evidence
AGE
1) Evidence
The population of social housing tenants is on average older than that of Scotland as
a whole:
22% of households in social rented sector are single pensioners compared with
15% of owner-occupiers and 7% of those in private rented accommodation;
29% of adults in social rented housing are aged 60+ compared with only 7% of
those in private rented accommodation;
around a third of adults in the social rented sector are under 35, compared with
66% of adults in the private rented sector.
(Scottish Household Survey, 2010).
By analysing current length of tenure of adults in social rented accommodation from
the Scottish Household Survey (SHS), we are able to estimate the proportion of
adults with preserved and modernised RTB terms. Estimates show that in 2010,
adults in older age groups are more likely to have preserved RTB terms than adults
in younger age groups:
41% of adults with preserved RTB terms are aged 60+, compared with around
18% of those with modernised terms;
almost two thirds of those with modernised terms are aged under 45;
those aged 25-34 are least likely to have preserved RTB terms (20%) while those
aged 75+ are most likely (72%).
(Scottish Household Survey, 2010)
We will attempt to gain more information during the formal consultation.
2) Effects / Impacts
We do not have detailed information on the characteristics of RTB purchasers.
However, a 2006 report to Parliament on the wider impact of the RTB suggests that
purchasers are increasingly younger, remain in the sector for a shorter period before
buying, and are more inclined to use RTB as a means of building up equity to enable
them to move to a more suitable house or a more desirable area (Scottish
Government (2006), The Right to Buy in Scotland - pulling together the evidence).
This suggests that although a greater proportion of older people are likely to have a
preserved RTB, they may be less likely to exercise it.
Although it appears that the proposal to move those with a preserved RTB onto
modernised terms would disproportionately affect older people, this has to be
balanced against the fact that most RTB purchasers tend to be younger suggesting
the older people have less inclination to buy.
We hope to gain more detailed information on this as part of the consultation by
targeting organisations representing older people.
23The proposal to repeal section 69 affects adapted properties which are currently
occupied by older tenants. However, we do not believe there will be any negative
impact on this group as a result of our proposal as it simply seeks to devolve decision
making about the sale of these properties to landlords.
It should be noted that there are other schemes that assist tenants in the social
rented sector to meet their homeownership aspirations without reducing the supply of
available stock for the future needs of the community. Low-cost Initiative for First
Time Buyers (LIFT) brings together several ways to help households get onto the
housing ladder. Details of these schemes can be obtained from the following website:
www.scotland.gov.uk/LIFT
24DISABILITY1
1) Evidence
Estimates from the 2010 Scottish Household Survey show that 42% of adults in
social rented accommodation have a disability or long term illness compared with
20% of owner occupiers and 16% of those in private rented accommodation.
By analysing current length of tenure of adults in social rented accommodation from
the Scottish Household Survey (SHS), we are able to estimate the proportion of
adults with preserved and modernised RTB terms. Estimates show that 57% of
adults in social rented accommodation with an illness or disability have preserved
RTB terms compared to 43% of adults with no self reported illness and/or disability.
It should be noted that the SHS provides a measure of self reported illness or
disability.
Further evidence will be provided in the final EQIA following the formal consultation.
2) Effects / Impacts
We will seek more detailed information through the consultation by targeting
disability groups.
The proposal to repeal section 69 affects adapted properties which are currently
occupied by older tenants with special needs, some of which will have disabilities.
However, we do not believe there will be any negative impact on this particular group
as a result of our proposal as it simply seeks to devolve decision making about the
sale of these properties to landlords.
The RTB reforms notwithstanding, people with disabilities are often prevented from
fulfilling ownership aspirations because of lenders’ policies on minimum income.
Advice on sources of finance and support is available through Ownership Options in
Scotland, an organisation dedicated to assisting people who wish to own their own
home but who are prevented from doing so because of their circumstances. More
information is available from: http://www.ownershipoptions.org.uk/
1
The definition of disability is broad and includes people with physical impairments, sensory
impairments and mental impairments.
25GENDER, INCLUDING PREGNANCY AND MATERNITY
1) Evidence
Around a third of households with a female head of household are in the social
sector (30%), compared with fewer than one in five households with a male head of
household (17%). (Scottish Household Survey, 2010).
By analysing current length of tenure of adults in social rented accommodation from
the Scottish Household Survey (SHS), we are able to estimate the proportion of
adults with preserved and modernised RTB terms. Estimates show that the same
proportion of male adults have preserved RTB terms as female adults (49%).
(Scottish Household Survey, 2010).
Further evidence may be provided in the final EQIA following the formal consultation.
2) Effects / Impacts:
We anticipate that our policy proposals will have minimal impact on gender given
that the same proportion of males and females hold a preserved RTB entitlement.
However, we will attempt to gain more information on the potential impact during the
formal consultation.
GENDER IDENTITY2/TRANSGENDER PEOPLE 3
1) Evidence
There is no data available on the RTB eligibility terms of people with gender identity
issues and transgender people.
Evidence on the wider experiences of LGBT groups in social housing is available in
the Stonewell report: “Safe and Secure? LGBT Experiences of Social Housing in
Scotland”
www.stonewall.org.uk/documents/safeandsecure.pdf
Further evidence may be provided in the final EQIA following the formal consultation.
2) Effects / Impacts
We anticipate that our policy proposals will have minimal impact on this group.
However, we will attempt to gain more information on the potential impact during the
formal consultation.
2
This is an individual's internal self-perception of their own gender. A person may identify as female,
male, or as androgynous/polygender (identify his/her gender as a combination of aspects of man and
woman or alternatively as being neither a man nor a woman).
3
Transgender: refers to a whole range of people who find their gender identity or gender expression
differs in some way from the gender assumptions made by others about them when they were born.
This can include: androgyne/polygender/genderqueer people, crossdressing/transvestite people,
intersex people, and others. (Please refer to the EQIA Guidance for a further definition of these
terms).
26SEXUAL ORIENTATION
1) Evidence
There is no data available on the RTB eligibility terms for Lesbian, Gay, or Bisexual
people.
Evidence on the wider experiences of LGBT groups in social housing is available in
the Stonewell report: “Safe and Secure? LGBT Experiences of Social Housing in
Scotland”
www.stonewall.org.uk/documents/safeandsecure.pdf
Further evidence may be provided in the final EQIA following the formal consultation.
2) Effects / Impacts
We anticipate that our policy proposals will have minimal impact on this group.
However, we will attempt to gain more information on the potential impact during the
formal consultation.
RACE4
1) Evidence
Looking at the rental sector only, 72% of ethnic minority adults in the rented sector
live in private rented accommodation, whereas around 71% of adults from white
ethnic groups live in social rented accommodation. These proportions do vary
across the different minority groups. (SHS 2009 and 2010 combined).
By analysing current length of tenure of adults in social rented accommodation from
the Scottish Household Survey (SHS), we are able to estimate the proportion of
adults with preserved and modernised RTB terms. Around 86% of adults from
minority ethnic groups have modernised RTB terms compared to half of adults from
white ethnic groups. (SHS 2009 and 2010 combined).
A 2005 report “Analysis of Ethnicity in the 2001 Census” provides wider analysis of
housing data by ethnicity groups in Scotland. The report can be accessed at:
http://www.scotland.gov.uk/Publications/2004/02/18876/32941
Further evidence may be provided in the final EQIA following the formal consultation.
2) Effects / Impacts
Given the evidence above we believe our proposals would have limited impact on
ethnic minority groups. However, we will attempt to gain more information on the
potential impact during the formal consultation.
4
The definition of race includes colour, nationality and ethnic or national origin.
27RELIGION AND BELIEF
1) Evidence
Looking at the rental sector only, 71% of adults from Christian religions live in social
rented accommodation compared to 41% of adults with other religious beliefs. (SHS
2009 and 2010 combined).
By analysing current length of tenure of adults in social rented accommodation from
the Scottish Household Survey (SHS), we are able to estimate the proportion of
adults with preserved and modernised RTB terms. Estimates show that 54% of
adults from Christian religions have preserved RTB terms compared to 40% of those
with other religious beliefs. 43% of adults with no religion have preserved RTB
terms. (SHS 2009 and 2010 combined).
A 2005 report “Analysis of Religion in the 2001 Census” provides wider context and
analysis of housing data by religion. The report can be accessed at:
http://www.scotland.gov.uk/Publications/2005/02/20757/53568
2) Effects / Impacts
Given the evidence above we believe our proposals would not have a
disproportionate impact on any particular religious group. However, we will attempt
to gain more information on the potential impact on religious groups during the
formal consultation.
OTHER IMPACTS
We are currently exploring the human rights implications of the proposals and we will
attempt to gain more information about this as part of the consultation.
28Risks and Monitoring
Risks
We do not believe there any significant risks for the policy in terms of delivering on the
equality issues identified. However, we will revisit this issue following the formal
consultation.
Monitoring
There will be no additional monitoring regimes required to gauge the impact of the RTB
reforms, that is, whether they are safeguarding or increasing the supply of social
rented accommodation. Using data from annual returns from social landlords, the
Scottish Government and the Scottish Housing Regulator already monitor RTB sales
numbers and the number of local authority and RSL properties available for social rent,
respectively. This monitoring regime will continue and will be key in determining
whether there has been an expected fall in RTB sales as a result of changed
legislation. The dialogue with key stakeholders that informs the RTB reforms will be
continued to ensure that they are having the desired effect.
29Annex B
Partial Business and Regulatory Impact Assessment
Title of Proposal
Reform of Right to Buy (RTB).
Purpose and intended effect
Background
RTB was introduced in 1980 but in its current form the basis is the Housing
(Scotland) Act 1987 ('the 1987 Act'), which was later amended by the Housing
(Scotland) Act 2001 ('the 2001 Act') and the Housing (Scotland) Act 2010 (‘’the 2010
Act’’). There can be exceptions in particular cases, but, in general terms, the 2001
Act 'preserved' the RTB entitlements of existing tenants and introduced 'modernised'
RTB entitlements for new tenancies that started on or after 30 September 2002. The
2010 Act kept existing entitlements, but ended RTB for new tenants, those returning
to the sector after a break, and for new supply houses. To help set our proposals for
reform in context, we have summarised this below.
'Preserved' Right to Buy Entitlements
Tenants who have RTB entitlements over their current house that date from before
30 September 2002 can buy after a two-year qualifying period with relevant
landlords. For houses their discount starts at 32 percent of the market value, rising
by 1 percent a year up to a maximum of 60 percent. For flats their discount starts at
44 percent of the market value, rising by 2 percent a year up to a maximum of 70
percent.
'Modernised' Right to Buy Entitlements
Tenants who gained the RTB between 30 September 2002 until 1 March 2010 (both
dates inclusive) have the right to buy after a five-year qualifying period with relevant
landlords. The modernised discount starts at 20 percent of the market value after
those five years and rises by one percent a year for all house types, up to a
maximum of 35 percent or £15,000, whichever is the lower. In 55% of all sales
under modernised entitlements, the £15,000 has applied, mainly due to the steadily
increasing value of properties over the years. Some tenants cannot exercise the
modernised RTB if they live in an area or house type that has been designated as
pressured or are tenants of a Registered Social Landlord (RSL) subject to a ten year
exemption. Tenants with preserved RTB are not currently affected by these
suspensions, but if the proposal to move them on to modernised RTB is adopted, we
would intend that the suspension would then also apply to them.
No Right to Buy Entitlement
From 2 March 2011, the 2010 Act ended RTB for new tenants and those returning
after a break. It also ended RTB and for new supply houses (those built or acquired
30after 25 June 2008) from 1 March 2011. It did not remove any existing entitlements.
Existing tenants moving to a new supply house cannot buy that house, but retain the
RTB if they then move to a house that is not new supply. The Act also changed the
pressured area rules, so that from 30 June 2011 local authorities rather than Scottish
Ministers can designate an area as pressured. They can make the designation for
up to ten years, and can designate house types as well as areas.
Objective
In our policy document, ‘Homes Fit for the 21st Century: The Scottish Government's
Strategy and Action Plan for Housing in the Next Decade: 2011-2020’, we stated –
“To strengthen the social housing sector, we have already acted to remove
the right-to-buy (RTB) for new homes and new tenants, and we will take
action to further restrict the RTB. While the RTB has provided new options for
households over the last 30 years, the costs of this policy will now fall on
future generations. The transfer of hundreds of thousands of properties out of
the social housing sector has decreased our social housing stock, and placed
increasing pressures on councils and housing associations. It has also had a
profound and detrimental effect on some communities, with less desirable
areas now even more marginalised. At the same time, many of those who
exercised their right-to-buy have struggled to meet the costs of home
ownership.(paragraph 111)
The discounts of up to 70% under the "preserved" (pre-2002) right-to-buy
scheme are unjustifiable. They leave social landlords out of pocket, leading to
pressures on rents for remaining tenants and an eroded asset base”.
We outlined in this policy document that we would consult on ways to reform the
preserved right-to-buy, to make it fair for both tenant and landlord. As part of this
consultation we are also taking the opportunity to seek views on changes that could
be made to existing legislation, including the option of completely removing all
entitlements to RTB in Scotland. We could set a date in the future for ending RTB so
that tenants would have a reasonable opportunity to buy before they lose the right
altogether.
These proposals fit with the Scottish Government’s policy of maximising housing in
the social rented sector.
Rationale for Government intervention
The discounts of up to 70% for tenants with a preserved RTB are unjustifiable. If
RTB is retained, we aim to move all tenants on to the more reasonable ‘modernised’
discount. We estimate that around 49% of local authority tenants have a preserved
right which would equate to around 149,000 households. In the Registered Social
Landlord (RSL) sector it is estimated to be 58,000 (22%) It is unfair that some
tenants benefit from much larger discounts than others. RTB legislation is too
complex and is difficult to understand for landlords and tenants, while RTB itself is a
policy that may have no place in today’s Scotland with our focus on increasing the
availability of social housing for those that need it most.
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