Housing sell off: ‘sheer stupidity’

David Cameron has confirmed that his right to buy extension to all housing association homes will now be part of the Queen’s Speech tomorrow (Wednesday May 27).

The scheme, in effect, is selling off two affordable homes for the price of one – at a time when the country has a massive shortage of affordable homes.

“Stepping up the sales of our remaining affordable housing stock in the midst of our biggest ever housing crisis is sheer stupidity and shows Cameron’s total lack of understanding or care for those struggling to put a roof over their heads,” says Steve Turner, Unite assistant general secretary.

The sell-off scheme was first introduced by Thatcher in the 1980s and was responsible for stripping the country and its councils of precious council housing stock.

There are 1.3m tenants living in non-profit housing association properties who would be offered the right to purchase their home if they have lived in it for over three years with a discount of up to 70 per cent.

Shockingly poor

The government’s current record on replacement of right to buy homes is shockingly poor. According to the Institute of Fiscal Studies 863 social rented homes have been sold in Greater Manchester since 2012 – only two of them have been replaced.

Money from the forced sale of council homes has to cover the right to buy discount on a housing association home, a payment to the Treasury, paying off any debt still owed from building the council home being sold, and a replacement council home.

The problem most councils are facing is that right to buy prices after the discount are not enough to cover the cost of building a new home after the payment to the Treasury.

The National Housing Federation (NHF) estimates that the North West is likely to face the biggest problems. Almost 20 per cent of potential sales are in the North West but only five per cent of the council stock is in that area – demand will outstrip supply.

The policy will also require a change in the law. As it stands many housing associations are prohibited from selling homes below the market rate. Yet some of the discounts offered in Cameron’s new scheme could be as high as £100,000.

It would also risk the viability of the entire social housing sector. Housing associations would be left crippled if the Tories force them to sell off their stock at a fraction of their value and many have threatened legal action if plans go ahead.

Vulnerable renters

The programme will also not help the millions of vulnerable renters, desperate to buy a home but with no prospect of being able to. There are also three million adult children living at home with their parents because they cannot afford to get a foot on the property ladder of even to rent.

Selling off affordable housing stock will also do nothing to alleviate the affordability crisis Britain is facing.

According to the Office of National Statistics (ONS), house prices have increased on average 6.9 per cent a year since 1980. The reason – lack of housing stock meaning demand outweighs supply.

The problem is only going to get worse with an ever growing population. A decade ago, the Barker Review of Housing Supply said that 250,000 homes needed to be built every year to prevent spiralling house prices and a shortage of affordable homes.

A Daily Mirror investigation found a third of ex-council homes sold under Margaret Thatcher were now owned by private landlords.

In one London borough almost half of ex-council properties are now sub-let to tenants.

Tycoon Charles Gow – whose father Ian Gow was one of Mrs Thatcher’s top aides and was housing minister during the peak years of right to buy – and his wife, own at least 40 ex-council flats on one South London estate.

“This isn’t the time to bestow ‘gifts’ on those already in secure housing,” said Sally Kosky, Unite national officer for housing association workers.

“Ordinary people are being forced out of their communities by high prices and speculation. We need public sector investment in new council house building on a massive scale and security of tenure for all those living in rented accommodation,” she added.