My Lords, Amendment 12 stands in my name and that of my noble friend Lord Watson. It effectively just states the existing legal position. It is here to remind trustees of their existing duties for when the Government later mandate them to sell their charitable property under right to buy. As the Minister knows, the Opposition is not against right to buy. Indeed, we want those who desire to be home owners to achieve that. Likewise the National Housing Federation and housing associations want to help tackle the housing crisis, but in their view a compulsory right to buy would make it more difficult. It is not the right way to achieve it.
In his maiden speech, the noble Lord, Lord Kerslake, said that forcing charities to sell off their property is wrong in principle and in practice. At a subsequent event, he said it would work entirely counter to the overwhelming priority of promoting new supply. The debate in the Chamber on Thursday saw Tories, Lib Dems and Cross-Benchers line up to condemn the proposal, and surely that will make the Government think again. Housing associations, which are mostly charities, provide 2.5 million homes for some 5 million people on affordable rents. They are rented privately, and many enable people with disabilities or care needs to live independent lives. Others are for shared ownership to help those on lower incomes to buy their homes. Housing associations build 45,000 homes a year and would like to build 120,000, matching what private builders are able to do. This aim could be undermined by them being forced to sell off their stock.
We know that civil servants warned Downing Street about the cost, which I think is at least £5 billion but could be more, and about the difficulties of replacing those sold, leading to a shortage of affordable homes. We know that in local government terms only one in 10 homes sold under RTB were replaced. Furthermore, any diminution of housing stock can harm housing associations’ borrowing powers. As the NHF has said:
“With a nation in the throes of a housing crisis, it is key that housing associations are in full control of the assets against which they borrow to build homes”.
The NHF obviously wants to increase home ownership, but it is concerned that the right to buy will make it more difficult to tackle the housing crisis. Right to buy could make it harder for the housing associations to deliver their charitable objective, which is, of course, providing for people in greatest housing need.
We know that housing associations lever in private finance in order to meet their charitable objectives and to manage their assets effectively. Forcing them to sell properties would give them less control over these decisions and, importantly for this Bill, would make it more difficult for them to meet their charitable purpose.
The National Housing Federation also worries that such interference sets a dangerous precedent for government intervention in independent charities. It cannot support giving government a role which should be the preserve of housing associations’ own charitable trustees. The NCVO similarly fears that the compulsory sale of charity assets through right to buy sets a worrying precedent of government interference in the running of independent charities. It would also, says the NCVO, contradict the rule that charities cannot dispose of assets other than in pursuit of their charitable objectives. In other words, using such assets for charitable rather than for political or private benefit. Hence, the NCVO supports Amendment 12.
There are other concerns about the policy, such as whether any bequests could be invalidated in the circumstances of a forced sale. We should remember the history of major providers of social housing. Peabody, close by here, was founded in 1862 by an American banker, diplomat and philanthropist, George Peabody, to,
“ameliorate the condition of the poor and needy in this great metropolis”.
Peabody’s mission remains much today as it was in 1862: to help make London,
“a city of opportunity for all”,
by helping people have a good home with a feeling of belonging which grows from involvement in the neighbourhood and the spirit of togetherness. Furthermore, Peabody strives to ensure that the landlord service is tailored to the individual, and residents are supported in their daily lives and in their aspirations. So not only would the forced sale of this property counter the bequest’s terms but, as those houses were sold on—perhaps let to the private sector—the charity’s aims could not be met.
During Second Reading, the Minister said that there was a precedent for housing association tenants accessing discounts to buy their own home. However, the preserved right to buy, which I assume he was referring to, applies to homes transferred from a local authority—and which thus have been built with public money—to a housing association. Charitable law is overruled in that case only because the charity was aware when it acquired these homes that right to buy applied. It is therefore a little misleading to suggest that this is similar to what is now being proposed, which will cover all housing association homes, whether donated to the charity, perhaps by special deeds setting out the purpose of the gift, or funded by money raised to house a particular client group.
The policy would reduce the supply of affordable homes. Given that such right to buy for housing associations would be funded through the forced sale of council properties, this would itself reduce the number of affordable homes. There are 2 million people on waiting lists due to the dearth of homes at affordable rents for low earners. Expecting the sale of a council home to both fund its replacement and reimburse the housing associations sounds to me like double-counting, and in London, of course, a complete impossibility.
The National Housing Federation, which is, of course, the expert in this field, calculates that the taxpayer’s money could be much better targeted at ending the
housing crisis. On its assumption that there will be about 220,000 eligible tenants who could afford to take up the right to buy, the discount would be £11.6 billion—for 220,000 people. That amount could provide 660,000 homes for shared ownership, which would give three times as many people a foot on the ladder. Housing associations already help people to buy their own homes, with some 250,000 now in shared-ownership homes.
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Rent to own is a good idea, so long as it is clear from the start what is meant and it is not taking charitable assets away from their original purpose. Housing associations want to fulfil their charitable purpose and deliver more homes for people on all incomes. They also want to continue their long-standing successful relationship with the public sector, where each £1 of public investment in housing associations is matched with £6 of their own money, which gives value to the taxpayer and affordable homes to rent and buy. To ensure that charities can continue their work, will the Government commit to consulting with the sector on plans to extend right to buy before publishing legislation?
I shall raise a couple of questions regarding forcing a charity to sell. First, some tenants might be connected persons—someone, or their partner or relative, closely associated with a charity, the trustees or donors. Any sale to a connected person has to be authorised by an order. Will the Minister confirm that all such charitable requirements would be fully met?
As the Minister knows, trustees can sell property only in a way that is: compatible with their trust deed; in compliance with Sections 117 to 121 of the Charities Act; and in compliance with the standard of care set out in the Trustee Act 2000. Will the Minister confirm that no trustee will be expected to act in contradiction to any such requirement? Some charities’ governing documents might expressly prohibit trustees from selling. This would probably require an order or scheme to give them power to sell. Have the Government considered such cases?
Where a trustee holds designated land—that is, required by the terms of the gift to be used to carry out the charity’s purposes—and where such land cannot be replaced by other relevant property or land, will the charity be excused the demands of the right-to-buy provisions? This might be the case where a charity holds a house once owned by a particular local figure, or associated with a former convent or almshouse sponsor. Those types of charities might need a scheme to change their objects, should they be compelled to relinquish the land because they can no longer carry out the purpose for which the land is held. This also means giving the public notice of the proposed sale. Can I assume that all those considerations will be carefully weighed by the Government?
It is clear that trustees can sell property only where it would be in the best interest of the charity. Will the Minister outline the Government’s thinking as to when such “best interests” are in conflict with the aims of the new policy? How, then, will the Government deal with that?
Governments also have to consider who else could be affected by the disposal. This might be the generality of the beneficiaries, or, indeed, public support for the charity. In particular, if the home forms part of a supported community—for example, for the elderly or the infirm, or for those with learning difficulties—where the whole is much more than a collection of residences, the sale of one or more of those units, where, obviously, later on other non-affected owners could move in, could have a considerable impact on the viability of the community and on its shared values and resources. Will such supported properties be excluded from right to buy?
We support helping families to own their own home, but too often right-to-buy homes then just get resold, especially as the subsidy offers the former tenants a nice big bonus to be realised. Many rapidly become rented out by private landlords at full market rent. They sometimes, of course, then attract housing benefit. Our concern with the Bill is that the Government want to interfere with the duties of charitable trustees to put their beneficiaries first and to comply with the trust deed. Housing associations can delight in the right-to-buy option for their tenants where that accords with their charitable objects. The problem arises where it conflicts: where trustees’ duties risk being overridden by the Government. The amendment therefore seeks to prevent them being compelled to do something that is not in the charity’s best interests. I beg to move.