Housing associations say they'll sue if the Tories force them to sell off homes under right-to-buy

The policy could face a legal challenge arguing it breaches property rights enshrined in human rights law

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Housing associations set to be crippled by Conservative plans to extend the right-to-buy policy will launch a legal challenge against the move, they have said.

The Tories have announced that they will force housing associations to sell off homes at a fraction of their value despite warnings that the policy could cause the not-for-profits to go bankrupt.

Tony Stacey, chair of a group of 100 housing associations and chief executive of South Yorkshire Housing Association, told trade publication Inside Housing when the policy was first mooted in March that he would “definitely” launch a challenge.

“I would definitely challenge it legally. This is so fundamentally critical to us. It would shoot up to the top of our risk map if it was confirmed. We are duty bound morally to fight it in any way we possibly can,” the Placeshapers chair told the publication.

Other housing association chief executives are quoted as saying they “would be surprised” if a legal challenge did not happen because the policy would risk the viability of the entire social housing sector.

Because housing associations are private not-for-profit businesses, forcing the sale of homes at below market value could potentially breach Article 1, Protocol 1 of the European Convention on Human Rights, which gives everyone the “right to the peaceful enjoyment of one’s possessions”.

Industry sources also say charity law would have to be changed to accommodate the move because charities, including many housing associations, are generally prohibited from selling off their assets at below market value.

Today’s move by the Conservatives was criticised by both the Chartered Institute of Housing and the National Housing Federation, which represent housing associations and the industry at large.

Ruth Davison, the Federation’s policy director, said: “We fully support the aspiration of homeownership but extending right-to-buy to housing associations is the wrong solution to our housing crisis.

“Following 40 years of successive governments’ failure to build the homes the country needs, soaring rents and house prices and the biggest baby boom since the 1950s, ensuring that there enough homes today and tomorrow must be our nation’s top priority.”

A spokesperson for the Federation said they would need to see the detail of the policy before they could say whether they would support a legal challenge.

CIH deputy chief executive Gavin Smart said he feared “the figures simply won’t stack up” for the extension.

“Right-to-buy has already had a huge impact on the supply of genuinely affordable homes, which is being cut at a time when more and more people are in need. The next government should be reviewing the way the policy currently works, not extending it,” he argued.

David Cameron officially announced the policy in a speech on Tuesday, arguing that it could benefit 1.3 million families and turn Britain into a “property-owning democracy”.

“We are the party of working people, offering you security at every stage of your life,” he said.

John Healey, a former Labour housing minister, described the policy as a “cheap Thatcher tribute act” and said it would worsen Britain’s housing shortage.