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