The government's proposals will make the housing crisis worse, at a time of rising homelessness
The inclusion of the extended Right to Buy to housing association tenants in the Queen’s Speech today signals a further, and perhaps fatal, blow to the viability of social housing. It comes on top of cuts in capital funding and welfare reforms that have hit social tenants disproportionately hard.
The Tories’ manifesto pledge to sell housing association homes to tenants at massive discounts represents a double whammy for the social housing sector: loss of housing association homes paid for by sale of council homes. So losses of stock in both social housing sub-sectors.
Many in social housing oppose the Right to Buy extension and hoped that the policy might be bartered in a post-election coalition deal or watered down after a period of sober reflection. No such luck.
Social housing has been in retreat since 1979, when the Housing Act 1980, one of the first pieces of legislation enacted by the Thatcher government, introduced the Right to Buy for council tenants. Since then, social housing has dwindled from about one-third of all homes to barely one-fifth with 1.4m homes lost to the Right to Buy, demolition or sale by social landlords to subsidise new house building.
This stripping of a national asset, over a thirty-five years period when England’s population has increased by a quarter, has partly precipitated today’s housing supply crisis and fed into worsening affordability in home ownership and private renting.
The government claims that sold housing association and council homes will be replaced on a like-for-like basis. Yet experience of the ‘reinvigorated’ Right to Buy for council tenants, introduced by the prime minister three years ago, points to this being far from certain.
To date, replacement of 26,000 sold council homes has seen just 2,700 replacements started. Even if the pace of replacement could be stepped-up – unlikely given the inelasticity of housing supply in the UK – the new homes won’t be ‘social’ but ‘affordable’ with rents charged at 80 per cent of market rates.
The housing consensus view is that the extended Right to Buy will further weaken an already shrinking social housing sector. Social housing will probably be barely 15 per cent of total homes by the time of the next general election, and a generation of young people will be consigned to living in over-priced and poor quality private rented housing.
It is also likely that many of sold housing association homes will eventually be owned by private landlords. It is estimated that one-third of ex-council homes sold since 1980 are now in the hands of private landlords who are able to charge much higher rents, often supported by housing benefit, than the former social rents. Coincidentally, more than one quarter of Tory MPs are private landlords.
The housing sector is seeking to fight the government’s proposals. Housing commentators believe that the government may be on dodgy legal ground by extending the Right to Buy since housing associations are independent housing agencies and not part of the state housing apparatus.
The policy may also threaten the future house building plans of housing associations and put at risk future investment in affordable and social housing since housing associations may lose control over their asset bases and projections of future revenue. Business plans will need to be rewritten and may be less able to borrow money to finance new house building.
The conclusion is that the extended Right to Buy is a purely ideological policy which will not increase the UK’s affordable housing stock but actually decrease it at a time of growing housing needs, homelessness and rough sleeping.
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