Guidance

Retained Right to Buy receipts and their use for replacement supply: guidance

Updated 10 July 2025

Applies to England

1. Introduction

1. This guidance incorporates the changes to the Right to Buy (RTB) pooling system that have happened since 1 April 2021. It takes account of the amended terms of the Retention Agreements to be concluded between the Secretary of State and authorities under section 11(6) of the Local Government Act 2003 to enable them to retain RTB receipts, and the subsequent amendments to the Local Authorities (Capital Finance and Accounting) Regulations 2003.

2. The guidance now includes the increased flexibilities and simplifications on the use of RTB receipts which were announced in the government’s response to its consultation paper Reforming Right to Buy on 02 July 2025:

a) indefinite extension of the flexibilities announced in the Deputy Prime Minister’s statement of July 2024;
b) further simplification and relaxation of the rules; and
c) allowing receipts to be combined with grant.

3. These measures are intended to support local authorities to accelerate and increase the delivery of new social and affordable housing. They will generally apply to the use of receipts from 2026-27. Local authorities are encouraged to make the best use of these flexibilities to maximise RTB replacements and to achieve the right balance between acquisitions and new builds.

a) The government is reforming RTB to deliver a fairer and more sustainable scheme, where longstanding tenants can buy their own homes but where councils can replace those homes. The government reviewed the increased discounts introduced in 2012, and, as announced at the Autumn Budget 2024, maximum RTB cash discounts were reduced to pre-2012 levels. The policy paper, A review of the increased Right to Buy discounts introduced in 2012, was published at the Budget, and the secondary legislation to reduce the discounts (and increase the cost floor period from 15 to 30 years) was laid at the same time, with the changes coming into effect from 21 November 2024. Also announced at the Autumn Budget was that local authorities would no longer be required to return a proportion of the receipts from RTB sales to ensure that councils were better able to replace homes sold under the scheme. Following consultation, the government confirmed on 2 July 2025 further planned reforms to the Right to Buy scheme. These include:

• increasing the length of time someone needs to have been a public sector tenant to qualify for Right to Buy from 3 to 10 years;
• reforming discounts so they start at 5% of the property value, rising by 1% for every extra year an individual is a secure tenant up to the maximum of 15% of the property value or the cash discount cap (whichever is lower); and
• exempting newly built social homes from Right to Buy for 35 years, ensuring councils are not losing homes before they have recovered the costs of building them.

The government will legislate when parliamentary time allows to bring these reforms into force.

2. Retaining additional receipts

Background

4. In April 2012, the government raised the maximum cash cap on Right to Buy discounts and confirmed that receipts generated by additional sales resulting from the discount increases (against a baseline of sales forecast before the increases) would be used to fund replacement stock on a one-for-one basis nationally. At the same time, the government offered to enter into an agreement with any local authority that wished to retain its own receipts from additional RTB sales so that it could reinvest them in new social and affordable housing themselves.

5. To retain their “additional receipts”, local authorities have been required enter into an agreement with the Secretary of State under section 11(6) of the Local Government Act 2003 (as inserted by section 174 of the Localism Act 2011). Under this agreement, authorities can retain receipts arising from additional RTB sales, provided the authority spends a sufficient level of those receipts on replacement social housing.

6. If an authority cannot spend the required amount within the time period specified in the agreement (see paragraph 18b), it must send the receipts to the Ministry of Housing, Communities and Local Government (MHCLG) through a process known as Local Authority Housing Capital Receipts Pooling. The department’s online collections system DELTA will determine how much must be paid each year, through a calculation explained in paragraphs 37 to 44 below.

Entering into and terminating a section 11(6) agreement

7. All 160 eligible authorities currently have an agreement in place.

8. Authorities will be offered an updated agreement that reflects the changes announced on 2 July 2025.

9. The Secretary of State continues to reserve the right to terminate any agreement. Should the Secretary of State exercise this right, amounts that had already been retained by a local authority under paragraph 2 of Part 2 of the existing agreement would continue to be retained, subject to the existing conditions of the agreement.

How the level of additional retainable receipts is calculated (up to 2025-2026)

10. The level of an authority’s additional retainable receipts in any year is the total amount of its receipts arising from RTB sales, net of the following 5 elements:

i. Transaction costs (retained by authority unconditionally) a set amount per RTB sale to partially cover the authority’s costs of administering the RTB scheme;

ii. Allowable debt (retained by authority unconditionally) calculated to cover that part of the authority’s housing debt it is obliged to pay off that is in excess of the debt its 2012 Self-Financing Payment has allowed for;

iii. Local authority share (retained by authority unconditionally) calculated to approximate to what authorities would have retained had the pre-2012 pooling system continued when they retained 25% of all net RTB receipts;

iv. Treasury share (paid to the Secretary of State, but see paragraph 15 below for rules from 2022-23) calculated to approximate to what authorities would have paid the Secretary of State, had the pre-2012 pooling system continued when authorities paid over 75% of all net RTB receipts; and

v. Buy-back costs (retained by authority unconditionally) calculated to cover incrementally half the costs of buying back former council homes.

How the level of retainable receipts is calculated (from 2026-2027)

11. The level of an authority’s retainable receipts (or conditionally retained receipts) in any year is the total amount of its receipts arising from RTB sales, net of transaction costs (calculated as in paragraph 10(i) above) and allowable debt (calculated according to a simpler version of the formula referred to in paragraph 10(ii) above.)

12. Local authority share, Treasury share, and Buy-back costs will no longer exist from 2026-27; they will have effectively been absorbed into the retainable receipts.

Retaining additional receipts

13. By entering into a section 11(6) agreement, a local authority does not commit itself to retaining its additional receipts. Rather, it commits itself to informing the department, through the DELTA returns (see paragraphs 51 to 55 below), how much, if any, it decides to retain and the amount that it is payable to the department. If it is late in providing that information, then DELTA will calculate by default the authority’s maximum retained amount.

14. If, after the due date for the annual DELTA financial return (usually 30 April in the relevant year, unless notified otherwise), the authority determines that it will pay some of that amount to the Secretary of State, then interest will be payable. See paragraphs 42 to 44 below for how interest will be calculated.

Retention of the Treasury Share

15. From 2022-23, local authorities have been permitted to retain the share of Right to Buy receipts that were previously returned to the Treasury. This can be retained on exactly the same conditions as their additional receipts -rules relating to additional receipts are explained below. The 2024 Autumn Budget announced that this arrangement would continue indefinitely. From 2026-27, the Treasury Share will no longer exist.

Returning additional receipts

16. Any additional receipts returned by a local authority (see below) are - after being returned to the Secretary of State - passed to Homes England or, for London boroughs, the Greater London Authority, for them to invest in replacement stock.

17. Like other registered providers of social housing, local authorities can bid for these returned receipts. You should contact Homes England or the Greater London Authority for information on how your authority can do this.

3. Spending retained receipts

Changes on the timing and quantity of expenditure

18. The rules on spending retained receipts have changed as follows:

a. Frequency of Deadlines: For retained receipts received from 2017-2018 onwards, spending deadlines have been calculated on an annual (instead of quarterly) basis, though a minimal amount of non-financial management information is collected quarterly.

b. Timeframe: For retained receipts received from 2017-2018 onwards, the timeframe local authorities had to spend them was extended from three to five years. (This and the change outlined in paragraph 18a above meant that, whereas the deadline for spending receipts received in the final quarter of 2016-2017 had to be spent by 31 March 2020, the receipts received in the whole of the following financial year of 2017-2018 did not have to be spent till 31 March 2023.) For retained receipts received from 2027-2028onwards, the timeframe will be extended again to ten years. This will make it easier for local authorities to undertake longer-term planning, including remediation of larger plots of land.

c. Maximum RTB Receipts Contributions: For retained receipts received from 2017-2018 onwards, the percentage cost of a new home that local authorities could fund using Right to Buy receipts increased from 30% to 40%. For retained receipts received from 2019-2020 onwards, this ratio is 100%. This will make it easier for authorities to fund replacement homes using Right to Buy receipts, as well as making it easier to build homes for Social Rent.

What retained additional receipts can be spent on

19. We know that local authorities are best placed to understand the social and affordable homes their communities need and to deliver them, but there are some restrictions on how authorities can spend their receipts.

20. Retained receipts can be used to supply:

• Homes for Social or Affordable Rent ^{[footnote 1]}
• Homes for shared ownership sale (for expenditure from 2021-2022 onwards) ^{[footnote 2]}
• Homes for sale as First Homes (for expenditure from 2021-2022 onwards) ^{[footnote 3]}

21. To avoid double counting of new homes, eligible spend up to 31 March 2026 on replacement housing not made up of retained receipts cannot include other forms of grant and certain other funding sources (see paragraph 32e below). From 01 April 2026 eligible spend may include grant-funded expenditure.

22. There is no requirement for replacement homes to be of the same type, size, location, or tenure as the homes they replace. These are decisions for an authority to make in accordance with local need.

23. While the government wants to encourage an increase in the supply of new housing, and so new build should always be the favoured option, receipts may be used to buy existing properties for conversion into eligible housing.  

24. The section 11(6) agreement requires eligible expenditure to be on homes “for the benefit of the authority’s area”. This does not mean that the homes must be physically in the authority’s area or owned by the authority, but if they are not in its area, then the Authority must either own the properties or have nomination rights over them (see paragraph 3 of Part 7 of the section 11(6) agreement).

25. Where an authority grant funds a private registered provider (see paragraphs 29 to 31 below), we would encourage it not to pay grant until scheme completion. This will enable the authority to demonstrate clearly to its auditors the level of its contribution in relation to the total scheme’s costs.

26. A detailed listing of what items may be included in the development cost is set out in Part 8 of the section 11(6) agreement. It is based on the definition used by Homes England in its allocation of equivalent grants to registered providers. For instance, while the purchasing of land for the purpose of providing a site for social housing may be included, the provision for this purpose of land (that is the value of land) already owned by the local authority may not.

27. By “spent”, the Agreement means more than a contracted commitment to spend the resources. The works or services for which the money has been (or is about to be) paid must have actually been carried out. Otherwise, the money cannot be included in the total. This follows programme management practices of Homes England.

28. That means that, where an authority has agreed that a housing association will spend the retained receipts and provide the replacement social housing, the simple grant of the retained receipts will not in itself amount to a spending of those receipts. Again, the authority will have to demonstrate to its auditors that the necessary work has been carried out. Local authorities should take careful note of this when planning a project, so that the work is carried out and paid for within the permitted period for spending receipts (see paragraph 18b above) or face the possibility that the funds will have to be sourced from other resources that do not come from retained RTB receipts.

How retained additional receipts can be spent

29. The authority may choose not to build or acquire itself, but instead to grant fund another body, such as a housing association – but  generally not a body in which the authority has a controlling interest. However, from 01 April 2026 local authorities will be able to grant fund Arms Length Management Companies (ALMOs).

30. An authority can also contract with a subsidiary (for example, its ALMO) to deliver the homes.

31. Where an authority decides to gift land to its partner housing association, the value of that land cannot be counted towards the housing association’s contribution. This is in line with the grant allocation process managed by Homes England.

32. Not all expenditure could count towards the eligible expenditure. Part 7 of the section 11(6) agreement explicitly excludes the following 5 categories:

a. Expenditure funded by other housing receipts (paragraphs 4(a) & 4(c) of Part 7 of the agreement): The provision in the Capital Finance Regulations which exempts local authorities from pooling their non-RTB housing receipts is in place to ensure that the receipts are used to provide additional social and affordable housing or regeneration projects. To include such expenditure within the additional funding that was to be levered would undermine this aim.

b. Expenditure used in the calculation of the Authority’s buy back allowance (paragraph 4(b) of Part 7 of the agreement) (up to 31 March 2026 only): This provision is primarily directed at authorities who wish to buy back properties in order to clear an area for regeneration purposes. If an authority buys back a dwelling for the purposes of re-letting it out at Social or Affordable Rent, then it may decide it would be more advantageous to include it in the “amount spent on the provision of social housing”, rather than in the buy back allowance (as defined in paragraph 3 of the Schedule to the Capital Finance Regulations). However, it cannot be included in both. Buy back allowance will be abolished from 01 April 2026.

c. Expenditure funded by an agreement made pursuant to section 106 of the Town and Country Planning Act 1990 (paragraph 4(c) of Part 7 of the agreement) (up to 31 March 2024 only). The two-year relaxation of this rule for 2024-25 and 2025-26 has now been extended indefinitely.

d. Expenditure on homes which are already social housing (paragraph 4(e) of Part 7 of the agreement): The government wants additions to the social housing stock, not changes of ownership of existing social housing stock. Consequently, this provision excludes the acquisition of homes by the authority of homes owned by a housing association or another housing authority. It also excludes improvements or conversions of existing social housing stock.

e. Expenditure partially or wholly funded by grant from Homes England or the Greater London Authority (paragraph 4(f) of Part 7 of the agreement) (up to 31 March 2026 only): The policy intention is that the Right to Buy replacement programme levers in new money. To allow resources to be levered in, that were funded by grant from Homes England or the Greater London Authority or were already levered in as a condition of that grant, would undermine that aim. Consequently, expenditure funded from those sources cannot be included in “the amount spent on the provision of social housing”. However, for expenditure from 01 April 2026, local authorities will be allowed to support projects funded by grants. Details on how the expenditure will be calculated will appear in this Guidance in due course.  

Acquisition cap

33. The government is keen for homes supplied using retained additional receipts to represent the best value for money, and to add to overall housing supply as much as possible. An acquisition cap was in effect for the two years, 2022-23 and 2023-24. This was set as a percentage of the number of homes that a local authority started or acquired using RTB receipts each year, rather than as a restriction on the cost of individual acquisitions.

34. It prohibited (after an initial allowance of 20 acquisitions) more than 50% of RTB replacements being delivered as acquisitions in the financial years 2022-23 and 2023-24. On 30 July 2024, the government announced that for 2024-25 and 2025-26 there would be no cap on acquisitions. On 02 July 2025 it was confirmed that the suspension of the cap would be extended indefinitely.

35.  Local authorities are expected to maximise delivery of new council homes and to achieve the right balance between acquisitions and new builds. The government will continue to monitor the numbers of new build and acquisition replacements and encourages an increase in the supply of new housing wherever possible.

36. For the years when the cap was in operation, local authorities were still allowed to acquire properties above the cap, but they were not able to use retained additional receipts to do so.

4. Returning unspent retained receipts

How the retained receipts are compared with “the total amount spent on the provision of social housing”

37. Every year in which it receives retainable receipts, the authority is given 5 years (10 years for receipts from 2027-28) to spend those receipts on replacement social housing and lever in the required amount of additional funding.

38. For the first 5 years, there is no requirement to return any retainable receipts – although an authority might conclude that it is in its financial interests to do so before then (see below). At the end of the fifth year, Part 4 of the agreement becomes effective and unused retained receipts from the first year must be returned.

39. This means that in order to calculate the required expenditure for the fifth year after the retainable receipts were received, the department’s online collection system (DELTA) will:

a. determine the level of those retainable receipts;

b. subtract from that amount any of those receipts which it has chosen to return to the Secretary of State (see below);

c. (if before 2019-2020) divide the net result by 0.4; and

d. add the result of this calculation to the cumulative required expenditure for the previous year.

40. To avoid the calculation of a ‘mandatory return’ of unused receipts, the cumulative eligible expenditure at the target date must be equal to, or greater than the cumulative required expenditure at the target date. This calculation is automatically undertaken on the DELTA system, using the data provided by authorities when completing returns.

41. In the years ending 31 March 2021 and 2022, there were no mandatory returns of retained additional receipts (see paragraph 18b above). Those unspent receipts already held from 2017-18 and later were subject to an extended retention period up to a total of 5 years from the date of the initial receipt (see paragraph 37 above). Receipts retained earlier than 2017-18 were already spent or returned to the department.

How interest is calculated on the returnable amount

42. Interest is incurred from the due date of the reckonable financial year until the day the returnable amount is actually paid back. It is calculated at 4% above base rate on a day-to-day basis; it was compounded quarterly up to 31 July 2021 and annually after that date.

43. We want to see retained receipts invested in new homes as quickly as possible. It is therefore to an authority’s advantage to repay retained receipts early (and thereby incur less interest) if it realises that it would not be able to make sufficient investment within the 5-year time period (10 years from 2027-28). Please note, however, that retained amounts which the authority repays cannot typically be given back to the authority.

44. Any interest paid to the department will be used to support the provision of new social and affordable homes.

5. Reporting and monitoring

Requirement to provide management information and statistical data

45. A local authority that enters into an agreement will be expected to supply light-touch management information on a quarterly basis in July, October and January, and to complete an Annual Pooling Form using DELTA following the end of the financial year.

46. Each quarter’s form will be released on the first day of the month following the end of the quarter to which it pertains. Authorities will have until the end of that calendar month to provide the required data.

47. Correct data must be provided by the end of that month. This is essential for our forecasting and to assess the impact of these policy changes to local authorities’ housebuilding. Correct completion of the Annual Pooling Return itself is essential to making sure you are returning the right amount to the department and not more or less.

48. The quarterly management information form in quarters 1–3 will continue to ask for the following information:

• Number of properties sold this quarter
• Number of new-build starts this quarter funded by retained Right to Buy receipts
• Number of acquisitions this quarter funded by retained Right to Buy receipts

49. The Annual Pooling Form on DELTA will require all the above information, as well as breakdowns of the type of sales, breakdowns of the size and tenure of replacements, breakdowns of the types of acquisitions, and a forward look on planned supply.

50. All annual statistical data except the forward look on planned supply will be published as official statistics and will need to be audited and signed off by a senior official such as a s151 Officer. The forward look will be kept as internal management information and not published unless requested under the Freedom of Information (FOI) Act.

Completing the Annual Pooling Return

51. Local authorities will enter the number of properties sold, and the amount of receipts raised by those sales. Full guidance on this is included in the help text that accompanies the annual pooling return.

52. The DELTA return automatically makes all necessary calculations, including Transaction Costs and Allowable Debt (and up to 2025-26 Local Authority Share, Treasury Share and Deductible Buy Back Allowance), together with Conditionally Retained Receipts, required expenditure on replacement social housing, and any mandatory repayments of unspent retained receipts.

53. The authority also has the opportunity on the Annual Return to:

a. Enter “Initially Returned Receipts”: This is the level of additional receipts that the authority decides before the due date it will not retain. If this amount is also paid before the due date, no interest is incurred. This information will be calculated by the DELTA return based upon the information entered by the authority.

b. The local authority’s statement of eligible expenditure by the relevant target date: The authority enters here its statement of the amount spent on the provision of social housing (as defined in the Agreement) between 1 April and 31 March. The DELTA return automatically calculates the amount that the authority is required to have spent to keep within the terms of the Agreement.

54. Where an authority wishes to adjust a previous year’s returned amount upwards, then it is required to make an amendment to that year’s DELTA Return which automatically is incorporated into the Payment Total of the current year’s Return.

55. Interest on returned payments must be entered in the relevant cell on the DELTA return.

6. Additional information: Poolable status of replacement homes

56. Any new council homes built since July 2008 are eligible for exclusion from the provisions in the pooling regulations relating to Right to Buy sales; this includes any new homes built or acquired using receipts covered by these agreements. This means that, if these replacement homes were subsequently sold under the Right to Buy, the authority would be able to retain the whole receipt with no conditions. While this means any receipts from sales of properties built since July 2008 can be spent on any eligible capital purpose, we encourage authorities to spend them on new social and affordable housing.  As soon as you are able clearly to identify such homes, you should contact the department to make sure they are excluded.

7. Queries

57. If you have any queries about one-for-one receipts, please contact the department at HRA.PoolingReturns@communities.gov.uk. We review and update this guidance regularly, so answers to queries may be incorporated into future updates.

8. Glossary

Additional receipts

Receipts generated by additional sales resulting from the 2012 Right to Buy discount increases (against a baseline of sales forecast before the increases) that can be retained by councils to fund replacement homes.

Allowance(s)

Permissible deductions from the Right to Buy Receipt prior to the Pooling Calculation (see paragraph 10 above).

Annual statistical data

Certified data provided by authorities in the Annual Pooling Return. This may be published in official statistics.

Annual Pooling Return

The annually released DELTA form which calculates an authority’s Pooling requirement for the year.

DELTA

The department’s online finance and data collection application.

Pooling

The process of managing Right to Buy receipts nationally, and specifically the process of calculating and collecting the amount of these receipts that should be returned to the department.

Quarterly management information

Tracking information collected in quarters 1-3. Not for publication.

Receipts

Income from the sale of properties under the Right to Buy, or Shared-Ownership programmes.

Retained amount

That portion of additional receipts retained by the authority, instead of returned to the department.

Returned amount

That portion of additional receipts that the authority has decided to return to the department.

1. The Agreement permits “low cost rental accommodation” that is not accommodation to which the Rent Policy Statement (see Chapter 5 of the Statement) does not apply. ↩

2. Defined as “The construction or acquisition of a dwelling for the purposes of granting a shared ownership lease to a person whose needs are not adequately served by the commercial housing market where the premium (which is a portion value of the market value of that dwelling) does not exceed 75% of the market value of the dwelling”. ↩

3. “First Home” means a dwelling which is disposed of as a freehold or (in the case of a flat only) as a leasehold property:
   
   (a) to a first-time buyer as defined by paragraph 6 of Schedule 6ZA to the Finance Act 2003,
   (b) at a sale price that is at least 30% below open market value,
   (c) at a sale price that does not exceed £420,000 if it is situated in Greater London or £250,000 if situated elsewhere or such other amount as may be published from time to time by the Secretary of State, and
   (d) subject to a condition restricting resale other than as a First Home. ↩