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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