House of Commons - Northern Ireland Affairs

Select Committee on Northern Ireland Affairs Sixth Report

5 HOUSE SALES SCHEME

79. The House Sales Scheme was introduced in 1979 to offer existing NIHE tenants an opportunity to become homeowners and have a greater stake in their local communities. The Scheme has been successful with nearly 22% of the owner-occupied sector now living in former social housing. The NIHE drew our attention to the much lower level of home ownership in Northern Ireland prior to the Scheme compared with the remainder of the UK, and argued "the right to buy has increased the levels of low cost home ownership for a large number of families who otherwise would not have had that opportunity".[118] DSD noted the Scheme's broader benefits in "helping to create sustainable mixed tenure estates, reducing anti-social behaviour and maintaining the stability of many estates across Northern Ireland".[119]

80. However, as set out above, the sale of NIHE houses to existing tenants is reducing the overall supply of social housing, and a number of respondents expressed concerns about the effect on the availability of re-lets. Professor Murie, University of Birmingham, argued that the impact of house sales on re-lets "is lagged rather than immediate because purchases are by sitting tenants who would not have moved anyway. This means that the impact of house sales may not be felt until twenty or more years later." The Northern Ireland house sales scheme has been in operation for 25 years and he warned the "the decline in re-lets in Northern Ireland may impact particularly heavily over the next few years". Professor Murie suggested "the key to balancing the impact of the Sales Scheme is an appropriate level of new building".[120] These views are endorsed by recent research commissioned by NIHE into the operation of the house sales scheme in Northern Ireland which drew particular attention to "the importance of seeing the House Sales Scheme as operating alongside other policies. Its impact on housing need is neither automatic nor inevitable. It is contingent upon other policies that are carried out and what is done with any capital receipts generated".[121]

81. The Inquiry into Housing in Northern Ireland by the Northern Ireland Assembly Committee for Social Development in 2001 called for a complete review of the house sales scheme.[122] Three years later when we started this inquiry a review of the scheme had not taken place, and many of the concerns expressed in evidence to the Committee for Social Development were repeated to us. For example, the Chartered Institute of Housing put forward a number of detailed proposals to amend the scheme,[123] and also reiterated its earlier calls for a review.[124] The Northern Ireland Federation of Housing Associations has put forward suggestions to correct what it sees as the present imbalance between the provision of social housing and the aspiration of people to own their own home.[125]

82. The DSD written evidence dated March 2004 stated that "With the extension of the House Sales Scheme to housing association tenants and, in light of the decline in social housing stock, the Department is currently reviewing the Scheme to determine what, if any, changes should be made to it."[126] This was welcomed by the NIHE. [127] In May 2004 proposals to amend the Scheme were published for consultation.[128]

83. The consultation paper contained no explanation of how the review was undertaken; the proposals appear to have been drawn up without the involvement of the main housing organisations, and contained no substantive discussion of the impact of house sales policy on social housing.[129] This appears to be at odds with what the Minister told us about his policy objectives for the proposed changes:

"… what we want to do is recognise the desire of a number of people to move into home ownership, but also to look at the balance between that and the interests of those who are on housing waiting lists or who will be on housing waiting lists in the future - the sort of issue that we were discussing earlier about the availability of social housing, and the availability of social housing in areas into which people would want to move. Therefore, we need to get that balance. We have looked at changes that have taken place in Great Britain. We have put out the consultation document."[130]

84. We heard strong evidence that the current position is untenable. The Chartered Institute of Housing pointed out that if the NIHE continues to lose 5,000 units per year, in ten years their stock level will have fallen to 45,000 only.[131] The Alliance Party warned of an impending crisis if the current house sales and demolitions continue without an adequate plan for replacements.[132] Sinn Fein was more pessimistic concluding that a crisis in social housing supply has occurred already.[133] We were most concerned, therefore, that the Minister was unable to provide any assessment of the likely impact of the proposed changes on house sales or on finance, and it seems clear that no such assessment has been undertaken:

"In terms of housing finance we have to assume that there is a possibility that there could perhaps be a temporary decline in sales. On the other hand, both from Housing Executive properties and from housing association properties, there would be a smaller payout from the housing funds in respect of each property. Quite frankly, we are not able to give a fine calculation as to how those two forces will balance out in terms of housing finance, but we recognise that there is a possible decline on one side and also a possible increase in income on the other."[134]

85. It is clear that housing bodies wish to engage in debate on this issue. For example, the Chartered Institute of Housing has suggested that house purchase policies should be decided according to local strategies and discounts determined locally to reflect housing stress and demand, a view which is in keeping with a conclusion in Affordable Housing that "Local authorities [also] need powers to suspend the right to buy in regeneration areas or where there is extreme demand for social rented housing, subject to approval by central Government".[135] NIHE had some sympathy with this but argued that such an exclusion could be challenged as breaching the statutory duty on public authorities to promote equality of opportunity under Section 75 of the Northern Ireland Act 1998.[136]

86. As we were considering the evidence to this inquiry, the Minister announced an extension to the House Sales Scheme to housing association tenants and implementation of the proposed changes on 8 October 2004. In making this announcement he indicated that the "main reason for these changes is to ensure that the policy of selling houses does not impact adversely on the supply of affordable housing both for those in urgent need of social housing and for potential first time buyers."[137]

87. The House Sales Scheme has been in operation for 25 years and has helped many people on low incomes to become homeowners. This is welcome. However, over the period the stock of social houses has shrunk alarmingly and more social houses have been sold than remain in NIHE ownership. We believe that the recent revision of elements of the House Sales Scheme was a missed opportunity to carry out a fundamental review of the entire Scheme. In particular, we are greatly concerned at the absence of any serious attempt to measure the likely impact of the sales policy on the future provision of social housing.

88. We also found no indication that in undertaking the review of the House Sales Scheme, the Department for Social Development has given consideration to the recent authoritative research commissioned by the NIHE and carried out by the University of Ulster and the University of Birmingham. That research had called for consideration of a range of alternative sales options.

118 HC 493-II Q179 Ev 90 Back

119 Proposals to amend the house sales scheme and extend the statutory right to buy to housing association tenants, DSD Consultation Paper, 18 May 2004 Back

120 HC 493-II Ev 205 Back

121 The Housing Executive's House Sales Scheme and the Housing Market, McGreal et al University of Ulster and Murie, University of Birmingham, March 2004 Back

122 Inquiry into Housing in Northern Ireland, Committee for Social Development, Second Report, Session 2001/2002. Back

123 HC 493-II Ev 3 Back

124 HC 493-II Q29 Ev 11 Back

125 HC 493-II Q61 Ev 27 Back

126 HC 493-II Ev 67 Back

127 HC 493-II Ev 81 Back

128 Proposals to amend the house sales scheme and extend the statutory right to buy to housing association tenants, DSD Consultation Paper, 18 May 2004 Back

129 The proposals address only four specific elements of the house sales scheme: qualifying period for discount; level of discount; clawback of discount in the event of resale; potential for social landlords to buy back former social houses in the event of a resale Back