In the Queen’s speech, the Government reiterated its intention to extend Right to Buy to people renting from housing associations. Properties owned by housing associations to rent to people at less than the market rate will now be offered to those tenants to buy, allowing more people to become homeowners.
In principle, this sounds like a great idea and when it was first introduced in the 1980s to council tenants I can certainly see why it was popular with the electorate, when almost a third were social renters.
The real problem is that this stock – that had given generations of low-income households a decent home at a low rent – was lost to the social sector and never replaced. In response to this criticism, the previous coalition Government promised that “every additional home that is sold will be replaced by a new affordable home on a one-for-one basis”.
Unfortunately though, in the three years since this promise was made, figures released today show that only one home has been replaced for every nine that have been sold. This is a pretty poor record so far. Whilst 29,505 homes have been sold over that time, only 3,422* homes have been started in replacement.
It’s no wonder that promises this time around of replacing homes sold are met with derisive snorts from those in the sector.
There’s also the problem that there will always be a lag between sales and building more, and so a downward pressure on social rented housing stock is inevitable at any point with sales ongoing. Therefore, replacing homes only after they are sold is never going to be an effective way of ensuring there are always enough homes.
Across England, there are also large disparities in where stock is being replaced. The North West is looking particularly dry with only two homes started in replacement compared with the 1,264 that have been sold through Right to Buy in the same time.
The most striking thing in the map above is the number of local authorities that have no council stock because they’ve already transferred them to housing associations. The extension of Right to Buy to these tenants could dry up homes available for low-income households in more areas than it already does now.
At a time when 1.4 million children are pushed below the poverty line solely due to high housing costs, it’s time that the Government realised that selling off some of our last affordable homes isn’t going to help the lives of families up and down the country.
*This excludes the 2014/15 Q4 Hounslow start figures which are subject to confirmation, as per DCLG’s figures in Table 693
The added problem in the new proposals is that the RTB of a property by a housing association is totally separate from the availability of a “expensive” high end council property.
An HA might sell, with a discount many properties before the local authority has been in a position to sell any of its rented properties thus releasing money for the new builds and to pay the discount to the HA. The HA will be nominally out of pocket by the amount of the discount unless it is intended that a Council will be required to pay the amount of the discount to the HA immediately upon sale. That would end up being a drain on council reserves until any such amount can be recouped from a sale.
High end properties are more than likely to be larger houses that are needed for larger families, so in the meantime where are they to be housed.
Recent figures also show that the number of families in B & B is increasing. It is a recipe for disaster. And the government can then blame councils if the policy fails by saying that they have given the power to councils but they have failed to implement it.
One thing the policy forgets is that back in the days of the post ’79 right to buy Local Authorities were also mortgage lenders. As I understand it they had an obligation to lend to tenants who we would now call financially excluded. However, today’s LAs have neither the power nor the responsibility to offer mortgages.
So, ask yourself, where will all the mortgages to people with often no credit history come from? Some RPs are working with Experian to get their tenants a credit rating based on their rent account history. One has to query whether the work of financial exclusion teams like that is actually money well spent by RPs now.