Right to Buy 2: the policy with next to no friends anywhere

Former head of the civil service Lord ‘Sir Bob’ Kerslake has become the latest in the swelling mob of voices to express reservations about the proposed extension of the Right to Buy.

One of his central concerns about the proposed extended schemes is – as we’ve said before – that it doesn’t do anything about housing supply and the numbers just don’t seem to add up. In case there were any doubts about the strength of his reservations, he’s described the policy as “fundamentally wrong-headed” and wrong in principle and practice.

It’s punchy stuff, particularly from the man who ran DCLG when the Right to Buy was extended in 2012. After all, he’s seen the books and should know what he’s talking about.

Everyone expected there to be some vociferous opposition to the extension of Right to Buy to housing associations. It has, ever since its introduction in the early eighties, been a divisive policy. But what’s most surprising is the breadth of voices that, like Lord Kerslake, have joined the anti camp since the Conservatives announced the policy. Opponents now include commentators for the FT, Spectator, Telegraph and Sunday Times; and organisations from the British Property Federation, Savills and JLL to the Institute of Fiscal Studies.

If these voices could be said to be singing from the same song sheet, they are definitely not all from the same choir. And it’s enlightening to see their different angles on why Right to Buy 2 makes bad policy.

So, being a fan of a list, I’ve brought the most notable of this unlikely coalition together in the table below, along with a summary of what they’ve said. Leave a comment below if you reckon I’ve missed out anyone who deserves a mention and I’ll rectify the omission.

Who? What have they said?
Lord Kerslake, Chair of Peabody, former head of the civil service and Permanent Secretary at DCLG It’s “a fundamentally wrong-headed” and wrong in principle and practice.
Legal & General Chief Executive Nigel Wilson That they agree with Lord Kerslake (skip to 1 hour and 20 minutes in)
National Housing Federation “This policy is not a genuine solution to our housing crisis. An extension to the Right to Buy would mean that housing associations are working to keep pace with replacements rather than building homes for the millions stuck on waiting lists. At a time when we need to be increasing the overall amount of social housing, it is like trying to fill a bathtub with the plug taken out.”
Institute of Economic Affairs That “it fails to address the real problem, which is the UK’s chronic lack of homes”
Ross Clark, The Spectator “The policy, hastily put together in the early stages of the election campaign, was roundly condemned from across the political spectrum.”
Martin Wolf, Financial Times It “is worse than a crime; it is a blunder.”
Dominic Lawson, Sunday Times “Any good Tory can surely see that this right to buy is wrong.”
Institute of Fiscal Studies Given this uncertainty, and the coalition’s less-than-impressive record in delivering replacement social housing under the existing Right to Buy, there is a risk that these policies will lead to a further depletion of the social housing stock – something the proposal explicitly seeks to avoid.
Chartered Institute of Housing It is “not going to tackle the housing crisis” and “could make things worse for people on lower incomes who are already struggling to access a decent home at a price they can afford.”
Savills “There is no certainty that receipts from sales of local authority homes would be as high as projected. It is also not clear at this stage what would happen if receipts are not as high as expected.”
Jones Lang LaSalle “Right to Buy benefits a select few while condemning the vast majority to longer waiting lists and fewer choices. At a time when we are building barely half the homes this country needs, we need a Government that is interested in genuine solutions to the housing crisis rather than cheap vote-winners.”
British Property Federation It “will limit the amount of finance housing associations can generate to fund and build new homes. It said this could have a negative impact on housing associations’ ability to invest in estate renewal and so would make it harder to get urban regeneration schemes underway.”
Camden, Islington and Haringey councils “We’ll see a fall in the number of council lettings, which in turn will push up private rents even further, particularly in outer London boroughs”
Julia Hartley Brewer, The Telegraph It’s “dumb, economically illiterate and – even worse – morally wrong.”
Unknown Conservative parliamentarians Unknown, but apparently something behind the scenes.
Moody’s “The extension of Right to Buy to housing associations will fundamentally change the business model of traditional housing associations”
Fitch “registered providers’ borrowing capacity could be constrained as the their balance sheets would weaken and the value of their available housing assets pledged for borrowings would decrease. This would constrain the RPs’ overall capacity to borrow even though the need for social housing is high due to strong demand across the country”
Standard & Poors “There is a very real danger to the financial stability of the sector arising from this proposal”
Association of Mortgage Intermediaries “The plan to give tenants the right to buy might be one of the most misguided election pledges. The money paid by the owner will rarely be enough to allow the asset to be replaced and will diminish the stock available to those who really need help.”
Andrew Montlake, Director, Coreco Group “Given that the Right to Buy scheme to date has not led to an increase in, or even a like-for-like replacement of, social housing, it is difficult to believe this time will be any different.”
Kate Barker, former Bank of England Monetary Policy Committee member and author of the Barker Review “Why should this group get a significant subsidy but the really poor get the bedroom tax and many in the private rented sector struggle to save for a deposit?”

One critic not included in my list, is the Mayor of London, Boris Johnson. The Mayor’s position might be characterised as changeable, but he’s probably best described as an enthusiast with reservations. Just as he was one of the original backers of the scheme, he has also since said that selling off council homes in London to pay for subsidies elsewhere would be ‘the height of insanity’. The outflow from London of receipts from council sales will be the inevitable consequence of the policy in its current form, so the strength of his reservations may trump his enthusiasm. Watch this space.

With such considerable opposition and so few friends, hopefully the government will think twice about rushing through the Right to Buy extension and the accompanying forced sale of council homes.

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