The number of homes sold under Right to Buy (RTB) in England that councils have been able to start replacing fell by more than a quarter last year with national restrictions increasingly hampering their ability to build, the Local Government Association warns.
Councils only keep a third of all receipts from sold RTB homes and further complex rules and restrictions mean councils are struggling to rapidly replace them.
The LGA said the current RTB scheme needs urgent reform to ensure councils are able to replace housing sold quickly and effectively. Councils need to be able to retain 100 per cent of receipts from any council homes they sell and RTB discounts should be set locally to reflect local house prices.
It comes after the LGA also revealed that millions of working people will no longer be able to afford somewhere decent to live by 2024 and will need access to some type of affordable housing. It is calling on new ministers to take urgent steps so councils can resume their historic role as a major builder of new homes and help tackle the nation's deepening housing crisis.
The LGA warns the economic uncertainty caused by Brexit and a widespread and growing demand for affordable homes - including for social and affordable rent - makes it even more important for councils to be handed greater powers to build new homes.
It forecasts that 66,000 council homes will be sold to tenants under the existing RTB scheme by 2020 and fear councils will struggle to replace the majority of these homes. Amid growing demand for affordable homes to buy and rent, this should be part of a wider ambition to allow councils to resume their historic role as a major builder of new homes in light of the economic uncertainty created by the UK's decision to leave the European Union.
Cllr Nick Forbes, LGA Senior Vice Chair, said: "Current RTB arrangements are restricting councils from being able to replace homes being sold under the scheme. RTB will quickly become a thing of the past in England if councils continue to be prevented from building new homes.
"Housing reforms that reduce rents and force councils to sell homes will make building new properties and replacing those sold even more difficult. Such a loss in social housing risks pushing more people into the more expensive private rented sector, increasing homelessness and housing benefit spending.
Scotland has scrapped RTB, and Wales is looking at doing the same. Councils in England believe this policy can be made to work if they are able to build the replacements that protect essential local housing, and ensure future generations can also benefit from the scheme. "If we are to stand a real chance of solving our housing crisis, councils need the funding and powers to replace any homes sold under RTB quickly and reinvest in building more of the genuine affordable homes our communities desperately need.
"Alongside the ability to borrow to invest in housing, councils need to be able to retain 100 per cent of receipts from sales, combine those receipts with other funding to build replacements and set RTB discounts locally so they reflect the cost of houses in the area."
The LGA is also urging government to work with councils to review how different elements of the Housing and Planning Act should now be implemented in light of the economic uncertainty created by the UK's decision to leave the European Union.
Cllr Peter Box, LGA Housing spokesman, said: "More and more families will be affected by our housing crisis every year. As our analysis shows, millions of people studying hard and succeeding in work will also no longer be able to find an affordable and decent place to live.
"Bold new action is needed to solve our housing crisis following the vote to leave the European Union. A renaissance in house building by councils must be at the heart of this.
"The private sector clearly has an important role to play but the reality is that it cannot build the homes we need on its own, and will likely be further restricted by uncertainties in the months and years ahead.
"Councils want to get on with the job of building the new homes that people in their areas desperately need.
"If we are to stand any chance of solving our housing crisis, councils must be able to replace sold homes and reinvest in building more of the genuine affordable homes our communities desperately need now more than ever."
