Right-to-Buy is gutting social housing: replacement building fell a quarter in 2015/16

A rational government would stop this privatisation of housing and invest in affordable homes

MAy in parl

 

Privatisation of the nation’s housing system remains a key government priority, despite the change in Prime Minister post-Brexit.

The main driver continues to be the ‘reinvigorated’ Right to Buy (RtB) council housing scheme, introduced by former Prime Minister David Cameron.

Since 1980, when RtB became the flagship scheme of Prime Minister Margaret Thatcher, around 1.9 million council homes in England have been sold.

Between 1980 and 2008, when the international financial crisis hit, an average of 67,000 council homes were sold yearly. However, the annual rate of sales had dropped to just over 8,000 between 2008 and 2012.

The new RtB, announced by Cameron in 2012, boosted incentives for council tenants to a maximum of 60 per cent of the value of a council home, capped at £75,000.

This far more generous scheme saw council house sales climb to about 16,500 in 2014/15, although this figure has since fallen back to 12,246 last year.

Broken promises 

Cameron repeatedly promised that there would be a one-for-one replacement of sold council homes, although replacement has not been confined to council homes but has incorporated ‘affordable rent’ and, in future, low-cost home ownership ‘starter homes’ will be the likely replacements.

Barely one in five sold council homes were replaced last year, representing a fall of 27 per cent on the previous year.

The Local Government Association predicts that 66,000 council homes will be sold by 2020, with the majority lost forever to the growing number of homeless people and the 1.4 million households languishing on council waiting lists.

The extension of the RtB to housing associations, with subsidies to tenants paid through the sale of higher value and vacant council homes, will further deplete the social housing stock and underscore its status as a tenure of last resort for the poor and disadvantaged only.

The government is looking to the private rented sector (PRS) to cater increasingly for people in housing need. The PRS has doubled in size in the last ten years, driven by the Buy-to-Let boom and underpinned by hyper-inflation in house prices since the early 1990s.

Fallout

Today, the private rented sector is larger than the social housing sector for the first time since the 1930s.

There are worrying aspects of this privatisation of housing provision. First, the PRS is insecure with limited lengths of tenancy and landlords who have little sympathy for tenants who can’t pay their rent.

Shelter reports that one in three private tenants are one paycheck away from eviction.

Second, the PRS is much more expensive than social housing. Recent BBC research found that people spend more than one third of their disposable incomes on rents across most of England.

Third, private renting costs the taxpayer much more than providing social housing. The difference in the weekly housing benefit claimed by the average low income private renter and an unemployed social tenant is £30, or £1,560 annually.

Another way

The save social housing campaign group SHOUT has documented the greater value for money to taxpayers of investing in bricks-and-mortar social housebuilding over continuing to stuff the pockets of private landlords.

Continuing with this privatisation will turn the housing crisis into a disaster, combining entrenched insecurity with escalating housing costs at a time of some of the lowest house-building seen since the early 1920s.

Surely a rational government would seek to engineer a public housebuilding programme at a time of slowdown in the construction sector post-Brexit, as part of a Keynesian infrastructure investment boost, and when the number of households in England is predicted to grow by 5.3 millon households by 2039?

Kevin Gulliver is Director of Birmingham-based research charity the Human City Institute, writing in a personal capacity. Follow him on Twitter @kevingulliver

See: A third of working families are a paycheck away from losing their homes

5 Responses to “Right-to-Buy is gutting social housing: replacement building fell a quarter in 2015/16”

  1. CR

    Yep, we all agree that Thatcher’s “Right to Buy” was a disaster, but the current housing crisis is much more a result of excess demand created by uncontrolled immigration over the past two decades and planning regulations that rightly put controls over what can be built and where.

  2. Carey

    I never thought to see this rate of homelessness and seriously inadequate housing in the UK. I grew up in a time when it was quite rare to see people who were homeless, I used to go abroad and see the homelessness and thank my lucky stars I was British. There have been periods of high immigration before ie when I was growing up in the 60s, all through history in fact government planned and otherwise, so don’t blame immigration and never say it “uncontrolled”! Ridiculous statement! What is “excess demand” exactly? The fault lies squarely on Gvts that espouse the doctrine of survival of the fittest – oh the same ones that promote a national min wage of just £7.20 per hour (under 25s need not apply) for those “hard working families” they’re forever going on about. And at he same time allow multinationals to get away will £billions in unpaid taxes which could be spent on our infrastructure and services, inc fair cost housing. Its not as if these multinationals don’t use our infrastructure directly and indirectly! What a nightmare this country has become… for so many of us.

  3. neil

    I love RTB, As everytime a house is sold the getto gets smaller. housing estates are wrong in every way shape and form and all should be knocked down. so lets sell them all off and in time they get cleaner, less drugs and crime.

  4. ted francis

    Council/social housing. (1) Quite simply remove the right to buy until supply exceeds demand or (2) require two-for-one replacements for each sale or a combination of both measures. (3) Impose 10 year covenants on resale of right to buy home.

    Private sector. (1) Abolish the role of estate agents commission system to remove the incentive to hike prices, (2) outlaw gazumping, (3) limit the amount by which a home can be sold above its previous purchase price.

    Compulsorily purchase any domestic property left empty for more than 1 year at a mandatory percentage less than the market place, to discourage homes being used as investments.

    MOST IMPORTANT. Undertake a programme to encourage the principle that a house is a home not an investment.

  5. Ted

    There are I read about 300,000 empty properties in the Uk at anyone time, these should be brought back into use. Social Housing should be given a re-vamp and at a time of low interest rates HA and Councils should be allowed to borrow to build and rent with a covenant that these properties cannot be sold for say 20 years in any RtB. The state has a lot of land to release for housing which it could sell to HA and Councils at preferential rates as long as iy was solely used for homes. Another issue is the second home market if you visit Cornwall for example and there are others, in winter some villages can have as few as one or two residents, this might sound like free market but at what price? Locals have to move and it destroys businesses.

    Buy to Rent has been a great success for banks, right wing news papers and the Tory party, they all support each other, but as a housing policy it is a disaster, driving up house vales, rents and attracting the worst of the get rich quick types. Our local paper carries reports each week of land;words who defy the Local Council and tenants who are exploited, I have had many comments by people along the lines of them buying a property to rent as an investment or pension, though this might be great for them it is not a housing policy.

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