High cost of right to buy

More than one hundred thousand council homes across England will have to be sold to fund the Tories’ extension of right to buy, according to a new report released today (September 17) from housing charity Shelter.

A key Tory election pledge – extending right to buy to 1.3m housing association tenants – was riddled with inconsistencies from the very beginning, when prime minister Cameron first announced the scheme as part of his party’s manifesto in April.

For example, critics noted, how would it be legally permissible to force housing associations to sell off their assets? Will the sold off homes be replaced and when? How much will all this cost?

Funding for the scheme, the Tories have said, will be raised by councils selling off their most expensive stock. The money raised from these sales would go to compensating housing associations for selling assets at discounted rates and would also be used to build more affordable property.

But Shelter has found in their report that sheer number of council homes that must be sold runs to nearly 113,000, which will decimate available council housing in different areas in the country, amounting to a forced sell-off of one out of every 14 council homes.

Shelter also estimated that, for example, Kensington and Chelsea would have to sell off 97 per cent of their council housing stock under the scheme, with Cambridge selling off about half and York nearly a fifth.
Camden, north London, would also see nearly half of its council housing disposed of under the new right to buy scheme.

Housing campaigners Generation Rent have argued that selling off councils’ most valuable properties would exacerbate social cleansing, particularly in London, by pushing low-income families outside of traditionally mixed communities.

And even if all the council properties were to be sold off to fund the new right to buy scheme, Shelter estimates there may still be a ÂŁ2.45bn funding shortfall over the next four years.

Shelter’s chief executive Campbell Robb argued that the extension of right to buy will only make matters worse for families up and down the country struggling to afford housing.

Barely a hope

“More and more families with barely a hope of ever affording a home of their own and who no longer have the option of social housing, will be forced into unstable and expensive private renting,” he said.

“The government needs to scrap this proposal and start helping the millions of ordinary families struggling with sky-high housing costs.”

Unite assistant general secretary Steve Turner agreed, arguing that right to buy has already proven disastrous.

“This new report demonstrates exactly what we at Unite have been saying for a long time — extending right to buy to housing associations is a disaster in the making. Why are we forcing the selloff of hundreds of thousands of homes when we have a massive shortfall of genuinely affordable housing?

“The Tory government claims that all homes sold off to extend right to buy will be replaced, but look at their track record so far – only 1 in 10 homes bought through right to buy to date have been replaced. he added.

Indeed, a Shelter analysis found that despite the government’s pledge in 2011 to replace council homes sold off on a one-for-one basis, replacement rates have been dismal.

In the three years since the government promise was made, only 3,422 homes were built to replace the 29,505 homes sold off. In some regions of the country, such as the North West, the situation is even more dire – only two homes were started in replacement of the 1,264 that have sold under right to buy.

Sham

Turner went on to argue that the government’s ostensible reason for creating the right to buy scheme in the first place – to create a property owning democracy – was a sham.

“Cameron claims he wants to spread the dream of homeownership to the masses, but the reality of the situation is that almost 40 per cent of the homes previously sold at knockdown prices under right to buy became homes for private rent with landlords who charge exorbitant rents, increasing the need for Housing Benefit,” he said.

An Inside Housing investigation from last month found that many of the 37 per cent of right to buy homes rented by private landlords are let for up to seven times more than the average social rents in the area.
For example, an ex-council two-bed flat in Bermondsey, south London, was being let for ÂŁ1700 a month and a three-bed maisonette in the same area was going for ÂŁ2400 a month.

“Right to buy is a twisted subsidy for the rich, which has only further exacerbated our housing crisis,” Turner said.

In response to the housing crisis, Unite has called for investment in a large-scale council building programme to build a million homes – and create millions of construction jobs in the process.
The union has also called for rent controls, regulations on private landlords and making housing benefit available to all adults, including young people.