Scotland has already scrapped so-called right-to-buy schemes and Wales is pushing through reforms to do the same. It’s now also time for England to stop allowing council tenants to purchase their homes at discounted rates.
The English love of home ownership is well known, which is why, in his party conference speech last week, chancellor Philip Hammond announced an additional £10bn to extend for the existing help to buy scheme for housebuyers.
Cash windfalls for a few lucky buyers might win their vote, but the majority must surely recognise that both the right to buy and help to buy schemes are economically and morally reprehensible.
The disaster in housing supply is increasing social and intergenerational inequality. In London, where housing problems are acute, 27% of residents (2.3 million people) live in poverty, and more than half are in a working family. The capital’s recorded homeless population of 170,000 is now more than double that five years ago.
Since right to buy was introduced in 1980, 2m properties have moved into the private sector and most are simply not being replaced. That’s 2m fewer homes local authorities can use to house those most in need. It’s ludicrous to suggest that in a time of crisis, we should be selling state-owned homes to those who live in them. It’s even more ridiculous to suppose that they should come with a discount – potentially more than £100,000 – on the purchase and retention of any future value uplift.
We’ve inverted an economic rationale that saw local authorities providing almost 30% of the total housing stock as affordable homes in 1980 to only 8% today. In doing so, we’ve gone from more than 80% of housing subsidies being supply-side in 1975 to support the construction of social homes, to more than 85% of subsidies being on the demand-side by 2000, helping people to purchase – including the help-to-buy scheme introduced in 2014.
The result has been less building and inflated demand, reflecting an expectation that the state should largely withdraw from an active role in housing provision. Though it is delayed until April 2018, the government still remains committed to extending the right to buy to housing associations. Accounting for 9% of total stock, this could double the future impact of the policy. The could also cost the Treasury £5.8bn a year, money that could be better spent facilitating construction.
Then there are practical problems arising from the sale of homes. Right to buy has introduced a mix of tenures into council portfolios. Private leaseholders and renters are now interwoven among tenants. Approximately 40% of homes sold under the right-to-buy scheme are owned by private landlords; some are rented back by those receiving housing benefit. There are few controls over who occupies these homes and how, and there is no statutory right to enter properties, to inspect alterations or living conditions.
With an undeniable need to build more housing in England, to sell homes that are purposefully built and available for those in need is absurd, bereft of logic and utterly irresponsible. It’s time to stop subsidising home ownership. Instead, let’s ensure state resources are deployed as long-term assets.
England must now join the other nations of Great Britain and scrap both right-to-buy and help-to-buy schemes.
Jonathan Manns is director of planning at global real estate consultancy Colliers International.
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