Opinion

Why Tories' New Right To Buy Plan Will Be A Disaster For London

Rachel Holdsworth
By Rachel Holdsworth Last edited 22 months ago
Why Tories' New Right To Buy Plan Will Be A Disaster For London
Photo by HoosierSands from the Londonist Flickr pool


The Conservative Party is pledging to extend the Right to Buy scheme to housing association tenants, because that all worked out brilliantly for the city's housing stock and affordability levels last time.

Right to Buy is the policy introduced by Margaret Thatcher's government which allowed council tenants to buy their homes at a discount. It was considered a vote winner at the time, but more recently has been fingered as a primary cause of London's housing crisis — because the affordable homes that were being sold off, were never replaced. In 2012 the coalition government increased the discount available — in London it's up to £103,900 — leading to a rise in council home sales.

Encouraging more Right to Buy for council homes has been rightly criticised — once these homes are sold, they're gone from the low cost sector for ever, becoming one more home on the open market. Fine, perhaps, if that makes you a homeowner, but the shrinking social housing sector has contributed to the boom in private renting, with its associated higher costs and increased burden on the taxpayer in terms of higher housing benefit payments. Maybe not co-incidentally, 36% of homes (PDF) sold under Right to Buy are now let to private tenants by landlords.

So extending Right to Buy at all is crazy. Extending it to housing associations — which are independent, not for profit organisations — is so crazy it's off the scale. The pledge will be available to tenants who have lived in their homes for three or more years, and the Tories say housing associations will receive the full market value of the property with the government plugging the discount. How? Here's the other side of this policy — councils will be required to sell off the most valuable 5% of the remainder of their housing stock, expected to raise the £4.5bn a year (£20bn over the lifetime of a parliament) that extending Right to Buy would cost. That money will fund the discount on housing association Right to Buy properties, and will also be handed back to councils to build more affordable housing.

But you'll already have spotted that councils will receive less than the market value of their sold homes, so councils will only be able to build in less salubrious areas. So much for London's much vaunted mixed communities — this is social cleansing by another name, and involves the loss of even more council housing (where are people on waiting lists going to go in the gap between housing being sold and new housing — theoretically — being built?).

Not to mention the impact on housing associations' ability to borrow, since what lender is going to approve loans against assets that the government has decided it can appropriate at will? Housing associations are currently the country's biggest builders of lower cost housing. Do not mess with that.

To get out of the housing crisis we're in, what we need to do is to build more houses. Sure, this policy would create some more council homes in cheaper areas, but it means losing two low-cost homes (Right to Buy + council house sell-off) for every new one built at a time when we need more genuinely affordable housing. And this policy does absolutely nothing for the people renting in the private sector, who would love to own their own home but can't, because rents are through the roof and they can't save up a deposit. Why? Because the lack of enough social housing has forced too many people into the private sector. If only there was a connection in all of this...

Let's give the final word to Ruth Davison from the National Housing Federation, which represents housing associations, on this morning's Today programme.

"Halfway through a programme of austerity and in the grips of a housing crisis, if you had £20bn of taxpayers' money, would you just give it away, as a gift, to some of the most securely-housed people in the country on some of the lowest rents. If we finally have some decent money to spend on housing, let's not just give it away to really well housed people."

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Last Updated 12 February 2016

hostile_17

I did feel a sense of despair when I saw this. I was going to vote Conservative but this gives me serious pause for thought.

C

This analysis makes no sense.

The current tenants will stay where they are when they buy. So they aren't being "cleansed".

Their cash will fund a new house, in a "less salubrious areas". We agree on that. But we don't know the origin of the new tenants in this less salubrious area, do we?

I think we can assume they aren't already resident in some swanky des res, or they wouldn't need social housing.

Plus! It's not selling social housing which means council houses are "gone from the low cost sector for ever". It's letting them. Once people move in they almost never leave. It's a house for life, or for generations, even if that family becomes rich (eg Labour minister Frank Dobson, and RMT boss Bob Crow).

This policy addresses the blockage. Gets cash from the old tenants (as much as they can cough up, without forcing them out the area). And helps fund places for new ones.

Lots of other good points in there, but the social cleansing one doesn't stack up.

James Guppy

Hopefully this analysis is fully explained via the media. Pretty bloody outrageous - what I don't understand is by what right can the Government just appropriate Housing Association stock?

Neal

Ruth Davison is a labour party member not independent

Slartibartfast

I hate the Tories' approach 'lets sell EVERYTHING!!' What are they going to do when there's nothing left to sell?

Linda Snell

This policy is bonkers, housing associations are independent and many are charities how dare the Tories say they must sell their assets, would they tell the Red Cross to sell their ambulances? This policy is wrong on so many fronts and does nothing to help the housing crisis and yes it does mean social cleansing. We need to build more social housing and stop the stigmatising of it.

Stephen Kerin

That is stone age thinking. Put down your pitch forks and try to stick to the facts. This site is veering to the left and as lefties do, just spouting do-gooder nonsense. The housing crisis is nothing to do with that sensational era of right-to-buy. Massive population boom is the reason. The right-to-buy scheme didn't reduce the housing stick, how could it? The truth is successive governments have struggled to keep up and even New Labour who literally sold the family silver and spent more than anyone in history failed to cope. The recent fabulous economic performance will at least give us some money to put towards new builds and people who have paid into renting council houses should have a chance to own those houses if they have been there for a long time. If they don't, what do they pass to their children, feel the pride of ownership, make their own decisions and more? I could go on but I have some work to do to generate some tax revenue for this wonderful country.

Steve Doran

http://goo.gl/E6h6Ld - and yet we still think they are the party of good business sense?

Christopher Fowler

New voters might want to read Andrew Hosken's 'Nothing Like A Dame: The Scandals of Shirley Porter' to see where RTB led last time; to the worst case of corruption in the history of local government.

Andy Brice

Usually I try to give all parties the benefit of doubt and keep an open mind about their policies. But this is a disgrace.

So the government can just forcibly appropriate your assets and liquidate them at will now? But only if you're a non-profit. Not if you're a private landlord, of course.

It really looks like an underhand attempt to sabotage all housing associations.

grammarschoolman

'because the affordable homes that were being sold off, were never replaced'

In other words, it wasn't the right-to-buy scheme that was the problem, but the lack of building. You've destroyed your own argument.

Frogmella

Far-left-wing claptrap.