David Cameron’s announcement about extending the Right to Buy at massive discounts to Housing Association tenants has created massive ripples, most relating to the financial, practical and moral issues involved.
But as things stand, the proposals may actually be unlawful. Under current legislation, charities – and most Housing Associations are charities – are not meant to sell assets at less than their value unless by doing so they are achieving their charitable objects. Obviously by selling off social housing they are NOT achieving their charitable object which is to house those in need.
Moreover, it is not legal to permanently deprive people of their property. That is the defintion of theft, and Housing Associations qualify as ‘people’. The crime can be mitigated by proper compensation, which the National Housing Federation, the umbrella body for Has, has demanded. But the Tory manifesto only gives a vague assurance that “money will be made available to enable replacement housing”.
Any change would need primary legislation – and would divide Parliament along more than Party lines. The feeling that this is “retrospective legislation”, as it applies to properties built before the rules were changed, will put off many. It is a general principle in English law that retrospective legislation should be avoided unless it is needed in the public interest. Hardly the case here.
HAs are essentially private companies, albeit not-for-profit and subject to regulation. The amount of grant they receive from the government has been diminishing, forcing many of them to become developers of private property for sale as well as social housing providers.
“Just because they have had some grant and are regulated does not classify their assets as public assets for the government to use”, says Catherine Hand, a partner at solicitors Trowers & Hamlins
“Many businesses receive funding/subsidies of various kinds and many are regulated but they would be surprised in the extreme if that meant they could be made to sell their assets at less than market value.
“And what about all the social housing built without grant at all? Some of the older housing belonging to the old housing trusts was built with private donations.”
David Cameron clearly wants to go back to Maggie’s magic wand. But the world has changed massively since 1980, when housing associations received 100 per cent grant funding, tenants paid fair rents and there was little private finance involved.
If implemented, Cameron’s Good Life idea would probably spell the end of social housebuilding, which be what he and his dogma-crazed party want anyway. But that can only begin to happen if – a BIG IF – he wins the election, and even them only after various legal challenges create another bonanza for the legal profession.