Right to Buy replacement - four steps to good news

Official figures released today show that the number of homes started by councils continues to be outstripped by the number sold off through the Right to Buy scheme. Of the 38,479 council homes sold since 2012, only 4,594 homes have been started  – that’s 1 for every 8 sold.

Since announcing ‘reinvigorating’ the Right to Buy scheme, the government has rightly promised to replace homes sold through the scheme on a one-for-one basis. This was a welcome change to previous policy, when no such guarantee existed. The stats suggest we are still some way from achieving this, yet today the DCLG claimed success in ‘exceeding the target for one-for-one’ replacement. So how did they arrive at this substantially rosier picture?

A loose proxy for replacement 

Replacements are counted by ‘starts on site’ in a Local Authority that aren’t wholly or partially funded by a central government grant. This means a home is considered ‘replaced’ as soon as a spade has gone in to the ground, not when it has been built. It also includes starts that could have been funded by other means, such as the rents that Local Authorities have retained from their other properties.

Only counting homes sold three years ago…

Government argues that councils have three years to replace a home sold, so only sales that happened three years ago should count towards the one-for-one target. This means that only Right to Buy sales from the first three quarters of the 2012-2013 financial year are included in their calculation, or 3,494 sales in total.

By this logic, we should match these to the number of starts three years later. Over the first three quarters of 2015-2016, there were 1,207 council starts. This would imply that for every three Right to Buy sales, one replacement was started three years later.

…and taking responsibility for only 1 in 29 Right to Buy sales to date

Unfortunately, the government made clear today that they have only committed to replace homes that they view as ‘additional’. This means the extra homes sold through Right to Buy over and above what would have been sold in the absence of the increased available discount in 2012.

Of course, to figure out how many are additional you have to estimate how many would have been sold anyway. As is the case with all alternate universes, this is entirely hypothetical and depends on some difficult economic modelling. Intriguingly, DCLG say they get this estimate from a HMT model – but digging in to the documentation, this model is based on Right to Buy forecasts ‘input by DCLG’. More clarity on this crucial step would, of course, be welcome.

Based on these figures, only 1,326 of the three year old Right to Buy sales considered by the DCLG are additional – that’s 1 in 29 of all the sales since 2012.

Source: DCLG
Source: DCLG

Taking credit for all non-grant funded council starts

By contrast, the government is more than happy to take credit for all starts since 2012. The same logic used for sales, however, could apply to starts too. Changes to how councils retain money from rents and other sales in 2010 could also have affected councils’ ability to build, so claiming that all starts over three years have been as a result of three quarters worth of sales is a stretch and a selective use of the concept of additionality.

Fiddly statistics and loosely phrased promises does not bode well for the other policy set to decimate our current stock of affordable homes  – the sell-off of council homes to fund extending the Right to Buy to housing association tenants.

No matter what the government defines as falling within its commitment, the fact remains that over the past four years we have lost vastly more low-rent council homes than have been built. Indeed, the National Audit Office estimates that to replace even the ‘additional’ homes sold through Right to Buy in 2014/15 by 2017/18, the number of homes started each quarter should be five times what it is now. They also raise concerns that replacements may not be the same size or in the same area as those sold.

Whether the government feels that this is their responsibility or not will mean little to the tens of thousands of homeless children waiting for a secure and safe place to live.

  1. Impressive analysis. Well done Sara

  2. To understand the total failure of the fifth richest country in the world to provide habitable homes for all its citizens, we must accept that homes are not the only function of houses. Houses are now investment tokens which includes laundering dodgy money from the tax havens. In consequence it is more important to maintain and increase prices than to provide more homes. The Hillsborough inquest exposed the establishment as shamelessly two faced so we should not be surprised by the total failure of all the over publicised plans to produce the homes that are so obviously needed.

    If the Government really meant to supply homes they would cancel Right to Buy, bring back Rent Controls and remove VAT from repairs and maintenance. Why no use the power of Shelter to suggest these remedies and watch the shock horror.

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