‘RIGHT TO BUY ‘is nothing short of Whitehall-sanctioned robbery of the taxpayer,’ Tom Copley, London Assembly Labour Housing spokesperson, said yesterday.
Copley added that the policy has ‘played a central role in causing and exacerbating the current housing crisis’
His report using data obtained under the Freedom of Information Act, ‘From Right to Buy to Buy to Let’ shows the financial cost to taxpayers and local authorities of the Right to Buy,
At least 36% of homes or 52,000 properties in London sold through Right to Buy are now let by private landlords at exorbitant rents.
In some London boroughs, average Housing Benefit claims are as much as £100 a week – £5,200 a year – higher for private sector tenants than for council tenants.
Local authorities frequently are forced to rent former council properties back at higher market rates to discharge their statutory homelessness duties.
But for local authorities too, Right to Buy has been a disaster.
Not only did they lose significant amounts of their housing stock for far less than market value along with a guaranteed revenue stream, the Thatcher Government’s decision to prevent them from building new council homes left a shortfall in supply that private sector house builders have never filled.
In October 1980 the Right to Buy passed into law as part of the Housing Act.
Over thirty years later, a policy intended to unleash a wave of owner occupation among Britain’s working classes has helped to facilitate the transfer of thousands of former council homes in to the hands of private landlords.
Since the introduction of Right to Buy in 1980, over 271,438 council homes have been lost from the local authority housing stock in London.
Shamefully, very few of these homes have been replaced by governments of all political colours. Between 1998 and 2011 alone, 880 council homes were completed in London compared to the 85,254 that were sold.
This is a ratio of almost 100 sales for every new home built. When combined with stock transfers, there were 285,000 fewer council homes in London in 2011 compared with 1991.
Housing Minister Michael Heseltine claimed at the time that: ‘No single piece of legislation has enabled the transfer of so much capital wealth from the state to the people.’
Privately rented households with dependent children have increased from 19% to 29%, highlighting a growing reliance on the sector by families.
Councils now rent back homes that they once owned from private landlords at much higher rents in order to fulfil their statutory duties.
Many of these families will find themselves renting a former council home at extortionate and unregulated rent levels from under-regulated and increasingly rogue landlords.
The data in this report is drawn from records of leaseholders who have registered an ‘away’ address with their local council (i.e. those owners who do not live in the property).
However, landlords are not required to register an away address and many do not, meaning that they appear to live in the property they let.
In March 2012, the current government announced it would ‘reinvigorate’ the Right to Buy by offering discounts to sitting tenants of up to £100,000 on council homes in London (£75,000 elsewhere in the country) – discounts funded by taxpayers.
At the time, the government stressed that they had learned the lessons of the past and would ensure that for every home lost another would be built.
However, evidence submitted to the House of Commons Communities and Local Government Committee in 2012 suggests that in London it actually takes 1.6 Right to Buy sales to fund each new council home.
Recent government figures also show that, nationally, only one new home is being built for every seven sold.
According to Inside Housing, ‘in 2012/13 and in the year to date, 10,954 council homes have been sold through the right to buy scheme, but only 1,662 replacements were started in the same period’.
Secondly, there is no requirement for replacement homes to be the same as those lost, meaning a four-bed social rented home charged at 40% of market rent can be replaced by a single room.
Council housing creates an asset for local authorities and provides stable rents, better physical conditions and offers tenants higher management standards than the private rented sector.
Median private sector rents in London are out of control, increasing by 12% in 2011 and 9% in 2012. As a consequence, as of the beginning of 2013, average rents in London were a staggering £1,196 per month, more than double the English average.
This has exacerbated the cost of living crisis experienced by many Londoners and resulted in a situation where, in some inner-London boroughs, average private sector rents were as much as £550 a week more expensive than local council rents.
Private landlord and lettings agent practices are getting worse in London.
Shelter reports that the number of complaints made by private sector tenants has increased by 47% in the last five years, and these figures are likely to be an underestimate given that a large proportion of rogue practices are never reported.
While local authority housing tends to carry a stigma for poor conditions, privately rented homes are actually more likely to fail even the most basic health and safety tests.
One-third of London’s stock of private rented housing, (more than 250,000 homes), currently falls below the Decent Homes standard used in the social rented sector. This is the largest proportion of any housing tenure in London.
Physical conditions in London’s private rented sector are worse than any other tenure of housing, while complaints against private sector landlords have increased by 47% since 2008.
Furthermore, local authorities have reported that 49% (356,465) of all London’s private rented homes had Housing Health and Safety Rating System Category 1 hazards in 2011/12.
Copley says: ‘It is obscene that a policy developed to promote home ownership has resulted in thousands of former council homes being let through the private rented sector. As a consequence, taxpayer subsidised housing is inadvertently being used to line the pockets of private sector landlords.’
Copley does not call for a ban on all council housing sales, and a mass council house building programme but argues ‘. . . reforms are needed to make Right to Buy socially, financially and politically sustainable in the long-term.
The report’s recommendations include:
• Mandatory covenants on all Right to Buy properties so they cannot be let through the private rented sector.
• The current system of discounts should be abolished.
• A new system should be introduced whereby local authorities retain an equity stake in any property sold.
• Local authorities should have a ‘right not to sell’ if it is not in the community interest to do so or if they believe it would harm their housing operations.
• Replacement homes built with Right to Buy receipts should mirror the rent, size and tenure specifications of the home sold.
Copley concluded: ‘This shows that Right to Buy currently represents incredibly poor value for money to taxpayers. Not only did they pay to build the home in the first place, they then subsidised the considerable discounts offered to tenants and then missed out on the rental income that would have covered the build costs.
‘Future governments must recognise that the right of a council tenant to buy their home at a discount, subsidised by other taxpayers, cannot be at the expense of the right of the vast majority of people to have a decent, affordable home to live in.’
