How will the Voluntary Right to Buy affect housing association property management?

Firstly, there is likely to be a flood of applications when the policy comes in unless it is clearly rationed.

Twenty-five per cent of all council housing has been sold under the existing policy. It’s likely that among the two million tenancies there are several hundred thousand that would be keen to buy with a discount of somewhere between £70k and £103k.

Even if it’s only 5%, that will be 100,000 applications.   Consideration of how to manage the tsunami of initial interest/applications should be at the top of housing associations’ and the Government’s agenda.

Hopefully, unlike the statutory process, it will be possible to charge the applicants for the cost of valuations.

The local authority experience is that there have been three applications for every completion as the curious take a look at their house price valuation (which is currently free).

If this happens there will be a deluge of applications, with 100,000 turning to 300,000.

In the long run, say 10 years, it’s likely that a percentage similar to that in local authorities will be sold off.  That might mean the creation of 500,000 new homeowners with most of them becoming leaseholders.

This has huge management implications for associations - to put it into context it is double the number of shared ownership properties (190,000) currently in the sector. This makes it even more imperative that leasehold managers get their act together.

Inevitably there arise some service charge headaches.  Firstly there’s the need to be able to predict a five-year cyclical and major works programme with costings as part of the application process.   

Secondly, it throws a spanner in the works of sinking and reserve funds as selling will be taking place through the life of the building.

Therefore, it is difficult to know when to establish a sinking fund and what the contribution should be unless live reserve funds are run from the rent roll. Alternatively, you could not have sinking funds on this type of sale.

When pepper-potted right to buys are sold in many buildings, accounts will have to be run for each block and to reconcile the costs for that building even if there is only one sale.

A couple of points instantly arise with this: it’ll be more expensive to administer, and you might as well bite the bullet and do full-blown block management accounting from now on.

The latter will of course mean that either legions of service charge officers will have to be employed, or some decent service charge calculation systems will have to be brought in.

The message for HAs on this is to take a leaf from the Scouts and “be prepared”, and get a shift on in preparing your approaches.

Steve Michaux is Group Director of Leasehold Services at A2Dominon Group and Chair of the National Leasehold Group.