Pete Challis details how the right to buy demolished England’s housing stock.
Pete Challis is a former Greenwich councillor and chaired the Association of Local Government housing committee from 1990-99
David Cameron has announced that the Tories plan to increase the discounts people in England will be offered if they buy their council home. He claims that the money will be used to build new ‘low rent’ homes to replace the homes that are lost.
This was the Tory promise in 1979 when the discounts were first introduced. As Chart 1 shows, in 1979 there were 5,140,000 council homes and another 368,000 owned by Housing Associations. By 1990 the number of council homes had fallen to 3,991,000. Housing Associations owned slightly more at 543,000.
Overall a million ‘low rent’ homes had been lost in a decade and most of them were houses with gardens.
The poll tax and the new system of local government finance then encouraged (according to the Audit Commission) largely small, seaside, rural (and Conservative) councils to sell their housing stock to existing or newly created housing associations.
For some the incentive was that the calculation that determined their government grant would continue to include debt they no longer had (it was paid off by the capital receipt from selling their housing stock) and they could then use that grant to keep poll tax levels down and claim that Labour councils were inefficient because they raised theirs, without telling their voters that they were getting a hidden subsidy.
By 2010 the number of council homes had fallen to 1,785,845 with housing associations owned 2,242,657 homes. So today there are almost 1,500,000 fewer council and housing association homes available for rent than in 1979 (xls).
David Cameron did not extend the increased discounts to housing association tenants so it will not affect his constituents as his West Oxfordshire Council sold their 3,630 homes stock to Cottsway Housing Association on 26 March 2001. The stock changed hands for £50.7 million equating to an average price per home of just £13,972.
Will councils get extra money to build new homes? It is the Treasury that will largely gain from any increase in capital receipts from the sale of council houses as Grant Shapps told local authorities in February when he announced the government’s proposals to make local authority housing self financing (pdf):
We have announced that the payment to Government of 75 per cent of the net receipts from Right-to-Buy sales will continue for at least the Spending Review period.
The sale of public housing is, by far, the largest privatisation programme.
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• Council tax freeze is a tax cut for the rich – Pete Challis, October 3rd 2011
• ‘Back of a fag packet’ housing policy continues – Kevin Gulliver, October 3rd 2011
• Social housing needs a ‘New Deal’ – Kevin Gulliver, September 28th 2011
• Why isn’t Boris coming up with any solutions to London’s housing crisis? – Jenny Jones AM, September 9th 2011
• CSR could herald the slow death of affordable housing – Jenny Jones AM, October 23rd 2010