Hackney Council wants to spend £10m a year buying back old social homes lost to Right to Buy
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Town hall chiefs want to start buying back homes lost to Right to Buy for use as “genuinely affordable” housing.
A report set to go before the council's cabinet on Monday outlines plans to set aside £10million per year from the affordable housing budget for the purchases.
In a report, mayor Phil Glanville said the borough faces an "unprecedented housing crisis", with more than 13,000 people on the housing waiting list, 3,000 of whom are in temporary accommodation, and more people turning to the council out of desperation.
In 2018 Hackney spent £54million placing homeless families in temporary accommodation, and wants to cut down on its reliance of private hostels.
Mr Glanville said he was proud that the council had itself built 900 homes since 2010 in the absence of government funding, half of which were genuinely affordable - that is, social rent or shared ownership. It is also on course to build 2,000 homes between 2018 and 2022 as part of its estate regeneration project.
"But building homes is hard," he said. "It costs around £300,000, and although our starting point is to build as many homes for social rent as we can, we can't build as many as we'd like to without more direct grant funding."
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The mayor added: "We therefore must seek innovative solutions to support the delivery of genuinely affordable homes in the borough.
"I am proud to lead a council finding innovative and successful solutions to the housing challenges we face. This report shows that scale of our ambition and how we will deliver on it to secure new affordable homes our residents so desperately need."
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Each purchase will be subject to the council's finance chief agreeing it is the most effective way to provide genuinely affordable homes.
Right to Buy homes are sold with a discount of up to £110,500 as it stands - the council has no choice but to sell them. The average value of an ex-Right to Buy home in the borough is £400,000, which means it would have been sold for £289,500. Of that, Hackney would retain £72,500 and £217,000 - 75 per cent - would be pooled centrally with the government.
The council must spend the receipts it keeps within three years or give it to the government with interest. And only 30% of any housing project can be paid for out of the receipts.
These rules make it harder for councils to use what cash they get, due to the lengthy process of building new homes. But there are now ways to prevent having to hand over the receipts.
In 2018 Hackney decided to give away receipts it could not spend to housing associations to build genuinely affordable homes in the borough.
Sadiq Khan has also created a £500m fund allowing councils to bid for grants that they can combine with receipts in an effort to stop them being given to government.