Right-to-buy plans could undermine centuries-old charity law, peers argue

The government's proposal to extend the scheme to include housing associations, most of which are exempt charities, is discussed in the House of Lords

Houses of Parliament
Houses of Parliament

Peers have criticised the government’s plans to extend the right to buy to housing association tenants, saying that it could undermine charity legislation dating back to the 16th century.

In a debate about the Queen’s speech in the House of Lords yesterday, peers discussed the government’s plans to widen the right to buy to housing association tenants, which would enable an estimated 1.3 million housing association tenants to buy their homes at discounts of up to £104,000.

The National Housing Federation, the umbrella body for housing associations, warned before the general election that the proposal would require a "fundamental rewriting of the agreement between government and civil society".

In the House of Lords yesterday, the Labour peer Baroness Hollis of Heigham, who is chair of Broadland Housing Association, questioned the government’s right to "seize the assets of independent charities, given that it will have to unpick myriad overlapping laws that go back centuries".

She said that housing associations, most of which are charities, were framed by charity legislation dating back to the time of Elizabeth I.

"Housing associations are independent charities, many of which are a century old, financed often by gifts from local benefactors," she said. "Would we accept the government asset-stripping Eton or Winchester to fund academies? Perhaps the NHS would like the endowments of medical charities to pay for the drugs bill. Or perhaps we would accept National Trust assets being used to restore this Palace of Westminster."

She said she hoped the legislation would never make it to the Lords. "If it does, I hope that this house will take it apart," she said.

The Labour peer Baroness Warwick of Undercliffe, who in September will become chair of the National Housing Federation, which represents housing associations, said that forcing housing associations to sell off their properties could set an "extremely dangerous precedent for government interference in independent business".

She said: "Perhaps most significantly, it would effectively mean that associations are no longer in control of their own assets. Preserving charity assets is a principle that has been in place since Elizabeth I, and the government really needs to exercise caution in undermining it.

"It is difficult to understand how a Conservative government could support a policy that essentially places the government in a role that should be the preserve of independent boards."

As expected, the crossbench peer Lord Kerslake, a former chief executive of the housing regulator the Homes and Communities Agency, also criticised the plans yesterday.

"In its current form, this policy seems to me to be both wrong in principle and wrong in practice," he said told peers. "It is wrong in principle because these are not the government’s assets to sell. Housing associations are private, mostly charitable, bodies. They have built up their housing stock over long periods of time to provide for those who are most in need."

The cross-bench peer Lord Best said there were "serious legal and practical objections to this policy".

He said that in the 1980s the Lords rejected the extension of the right to buy to charitable housing associations, "principally on the grounds that government should not be ordering independent charitable bodies to dispose of their assets to the benefit of some tenants of today but at the cost of diminishing the charity’s capacity to help others in need in the future".

In response, the Home Office minister Lord Bates said that the right-to-buy plans were about giving people a stake in society through owning their homes.

"We talk about social mobility; it starts with people being able to take a stake in society and have a home of their own, from which they can draw an income in retirement and pass on to their children, should they so wish," he said. "That is a fundamental principle that we want to protect."

He said the government was committed to building 275,000 affordable homes in the social sector and that ministers and officials were already in discussion with organisations in the housing sector about how to make that happen.

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