The government’s plans to sell off valuable council homes to fund the extension of Right to Buy to housing association tenants has inevitably generated a lot of heated debate. A lot of that debate has focused on the impact it will have on London.
It’s unlikely that huge numbers of housing association tenants in the heart of the capital will be able to exercise the new Right to Buy, as even with a £100,000 discount London prices are still beyond most tenants. But the forced sale of council housing will have a profound impact. Some London councils are projecting that they will be forced to sell as many as 40% of their homes at a time when they are desperately needed.
This means that the money raised from council home sales in London will flow out of the city to fund discounts for housing association tenants in the rest of the country – and outcome which Boris Johnson himself has said that it would be the “height of insanity”.
But this is not just a London problem. It will hit people who need council housing in areas across the country. This is because whether a council home is above the value threshold and considered to be ‘too valuable’ (and therefore subject to enforced sale) will be assessed against regional house prices. All council homes that are in the top third most valuable in the region will be forcibly sold on the open market when they become vacant.
It’s easy to see that some council homes are likely to be more expensive just because of where they are. Take the South East, for example. It includes both Oxford – the most expensive city to buy a house in the country – and (over 100 miles away) Hastings, which isn’t. So a council house in Oxford would naturally be more expensive than the same house in Hastings.
It’s impossible to know at this point exactly which councils have homes that are generally above regional averages (even the government hasn’t got a clue). Some surveying of councils has taken place and Savills have also done some projections of the total amount that may be raised. But it is possible to get a further indication of where it will hit by looking at the value of homes that were sold through the existing Right to Buy scheme for council homes, which is possible by looking at the available data for last year.
The table below shows first those areas where it’s more likely that a large number of homes will be sold. We’ve worked this out by comparing the average sale price of either one bed or two bed council homes sold under the Right to Buy to the sale thresholds that were mooted before the general election. The first councils are those where the average sale price is above the threshold. This means that the average council home would need to be sold, so we can expect a large proportion of council homes in that area will have to be sold. The table then shows every area where the average price is within striking distance of the threshold. This would suggest that a significant chunk are above the threshold.
Areas more likely to be forced sell council homes, outside London
|Council||Total council homes||Households on the waiting list||Households in temporary accommodation||Children in temporary accommodation|
|Average council home is above the thresholds|
|Average council home is within striking distance|
|Brighton and Hove||12,100||19,071||1,398||1,680|
|Newcastle upon Tyne||28,580||6,111||42||59|
The consequences for these areas will be serious:
- It will mean less chance of getting a council house for those on the waiting list
- It will mean less chance of getting out of temporary accommodation for those homeless families and children that are currently living in places like bed and breakfasts
- It will mean increased costs for councils as a result – cutting into money for other local priorities
- It will undermine councils’ ability to build more homes, undermining organisations that are going to be vital to solving the housing shortage
- It could push up private rents and make it more difficult for private renters to save up for a deposit
- And it will mean money leaving some areas to go to pay for Right to Buy discounts in others.
And it won’t just have consequences for these areas. Just as outer London boroughs have come under extra pressure as a result of welfare changes, the areas neighbouring those hit by forced council sales will also face greater challenges and costs as people in need of housing are displaced there.
Shelter has previously pointed to the miserable record of replacing existing Right to Buy homes outside London. The government’s proposal to fund the new extension by selling off council homes is likewise going to have an effect well beyond London and the South East – and people across the country will feel it.
 I’ve worked this out by uprating the mean average (total value of homes sold divided by the number of sales) to the 66th percentile. This is obviously not ideal as it means treating a mean average as though it was a median, but it’s the only indicator available.