Commenting on the decision by the majority of housing associations to vote in favour of the National Housing Federation and Government’s proposals on Right to Buy, Jan Crosby, Head of Housing at KPMG, said:
“This vote will undoubtedly be seen as a landmark in the housing association sector’s history. By achieving voluntary agreement, the NHF and Government have enabled the initial decision to be made quickly without regulatory red tape, but the ‘how’ is understandably unclear and could take some time. The biggest issue is likely to be the timing gap in funding between the 70 per cent reimbursed by government when a property is sold and the remaining balance received when a new home starts on site, which it can be hoped will be proactively bridged by Government. Another hurdle is the fact that as it stands, replacement build costs are likely to be higher than sale receipts in some areas, due to the level of Right to Buy discount. These and other details need to be worked through.
“For housing associations, it will be vital to review their financial plans with some urgency, specifically looking at funding, corporation tax and VAT implications, so that they can enter this brave new world with the insight and planning they need. With the target for replacing a home two years after a sale, time is of the essence.”
Frances Shennan, Corporate Communications, KPMG
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