Over the next ten years 1.5 council homes are expected to be lost for every new home that is built
While there are multiple reasons for London’s housing crisis, perhaps the single biggest cause was the decision made by the Thatcher government in 1980 to prevent councils from reinvesting Right to Buy receipts in new homes.
The effect of this decision has been tragic. Last year just 17,000 homes were built in the capital. In 1978, London’s councils alone built more than that at a time when the population was actually falling.
Because the private sector and housing associations never filled the gap left by councils, we are left with thirty years of catching up to do. Had councils been able to replace the stock that was sold off under Right to Buy we would not have a council housing waiting list of 800,000 in London. Nor indeed would we have faced soaring private rents or an average house price of more than £500,000.
When the current government decided to reanimate the corpse of Right to Buy, offering London council tenants a maximum discount of £100,000, we were assured that any home sold would be replaced. Today I have published a report which finds that this promise is as empty as a flat in One Hyde Park.
The report, Out of Stock, has found through a series of Freedom of Information requests to London boroughs that over the next ten years 1.5 council homes are expected to be lost for every new home that is built. In outer London the picture is even worse, with councils expecting to lose two homes for every new build home.
This is, of course, on top of the 275,000 council homes that have been lost in London since Right to Buy was introduced in 1980.
Given the scale of London’s housing crisis, and the desperate need for social housing, it is clear that Right to Buy needs serious reform to prevent further erosion of stock. Yet senior Conservatives are now proposing to do just the opposite and extend the Right to Buy to Housing Association properties.
Housing Association tenants currently have Right to Acquire, but the maximum discount for this is £16,000 compared to £100,000 for council tenants. Only those tenants whose homes were stock transferred from a council have what’s known as preserved Right to Buy.
By extending Right to Buy to all Housing Association properties, the government would seriously undermine their ability to raise funds to deliver new housing. Government grant for affordable homes was slashed by 60 per cent in London as one of the coalition’s first acts.
This has left Housing Associations reliant on their ability to raise funds through borrowing and raising rents. Colin Wiles points out that lenders only began lending to Housing Associations in 1989 because they were excluded from Right to Buy.
This also begs the question of why tenants of social landlords, which are still private organisations, should get the Right to Buy their home at a discount when tenants of private landlords have no such right.
The reaction from the sector has been one of horror. One Housing Association has said that under the preserved Right to Buy it already takes seven home sales to fund one replacement.
If the Tories, for ideological reasons, are successful in extending Right to Buy across the social rented sector the consequences for the delivery of new affordable homes will be disastrous.
Tom Copley is a Labour Londonwide Assembly Member and the Labour Group Housing Spokesperson. Follow him on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.