How community right to buy can help deliver community-led regeneration

Despite years of rhetoric around levelling up, England remains riven by geographical and regional inequality. Decades of centralised decision making and underinvestment in our former industrial heartlands have produced a country in which access to jobs, wellbeing and opportunities continue to be driven by where you live. The spectacle of empty, dilapidated homes in so called ‘left behind’ areas is one of the most obvious signs of this. They attract anti-social behaviour, depress property values and damage local communities’ pride in their local area.

Different governments over recent decades have recognised this, albeit to differing degrees. The last Labour government’s New Deal for Communities invested billions to regenerate deprived neighbourhoods and tackled empty homes. Between 2012 and 2015, the Coalition government’s Empty Homes Programme provided some grant funding to breathe new life into empty homes. But since it was scrapped in 2015, the number of homes lying unoccupied has increased by over a fifth. Recent research from Crisis has drawn attention to the indefensible contrast between rising homelessness while 250,000 homes lie empty.

An ecosystem of community-led housing organisations – like Giroscope in Hull, Latch in Leeds, Community Campus in Stockton – buy and renovate poor-quality and empty homes to let below market rents. These groups can transform previously dilapidated homes, provide truly affordable housing, revitalise empty streets, and provide local job and apprenticeship opportunities. By definition, these groups are locally focused, and are composed of people grounded in their communities.

This model mirrors how many of the UK’s largest housing associations began their existence. But many of this newer wave of community-led housing organisations prefer the flexibility that comes from not being registered social landlords. This means, however, they do not have access to Affordable Homes Programme grant funding. There is now only limited central grant support available to them, and rising interest rates pose a threat to their funding model. The community-led sector therefore needs support if it is to be sustained, let alone flourish and play an important role in regenerating communities. The challenge is to allow these groups to upscale and for more ‘medium-sized’ providers to play a meaningful part in resolving the housing crisis in their neighbourhood, while keeping a community focus.

When acquiring new homes, community-led housing associations are often in competition with buy-to-let landlords, frequently cash buyers with large portfolios. Community-led housing groups – as well as other social landlords and indeed owner occupiers – often struggle to compete with these equity-rich, portfolio landlords, who are less exposed to higher interest rates. Cash buyers enjoy a near £30,000 effective discount. While some private landlords are therefore selling up, deprived areas still provide opportunities for buy-to-let, often absentee, landlords to speculate. Low house prices in ‘left behind’ areas mean they continue to produce relatively high rental yields for landlords.

Crucially, these landlords continue to extract rent from local economies while failing to invest in homes, people or communities. Public investment in community-led housing is also good value for money, creating £3 in value for every £1 of public money spent. If we want these organisations to have a competitive advantage over wealth-extracting buy-to-let landlords, the government should introduce a ‘community right-to–buy’. This would give local authorities and community-led housing organisations the right of first refusal for a set period when properties become available for sale.

Community right-to-buy has support from the community-led housing sector, but will not be necessary in areas where prices are already high. However, in areas where there is little demand from residential home buyers, but a greater number of empty homes and continued speculation from buy-to-let landlords, a community right-to-buy would help catalyse locally-led regeneration and allow communities to better retain their own wealth.

Any impact will be limited, however, without more grant funding. The government failed to spend £600 million of the Affordable Homes Programme in 2022/23 because developers do not want to build in current market conditions. Why not lift the 10 per cent cap on acquisitions within the Affordable Homes Programme, and use some of that money to allow more local authorities to act nimbly and buy homes, including temporary accommodation, in order to tackle rising homelessness? The rest could be used to revitalise the Empty Homes Programme and provide vital grant support to help community-led groups to upscale and play a greater part in tackling the housing crisis.