THE Government’s right-to-buy scheme has been so successful at diminishing remaining council housing that it is danger of ‘eating’ itself out of existence.
As it is, warns the Local Government Association (LGA), the discounted sale of council homes to eligible tenants is serving not only to reduce a much-needed source of social housing, it currently limits capacity to build replacements – serving to make the housing crisis worse.
“We were pleased the Government listened to our call to scrap the housing borrowing cap to give councils more freedom to build council homes. But it makes no sense if these homes are then potentially sold at a heavily discounted price,” said Councillor David Renard, the LGA’s housing spokesperson.
“Protecting council investment in new stock is crucial if we are going to build the homes the country needs. Right to buy continues to enable many families to achieve the dream of getting on the housing ladder and owning their own home. Without reform of the scheme, future generations will not enjoy the same opportunity.”
Since the Government increased the level of right to buy discounts in April 2012, the sale of homes has surged – pretty much as intended. Between 2012/13 and 2018/19, the LGA says that 79,119 homes were sold off at a massive cut price.
The national discount currently averages 42% of market value, meaning council properties can be bought for almost half price. Since the Government increased it, the average discount on a property has gone up by 137% to more than £63,000.
All told, the LGA estimates that tenants have benefited from £4.9 billion in right to buy discounts to buy their own home.
Replacing these homes has proved difficult to say the least. Councils are only able to use a third of monies received for each right to buy sale on building a replacement home. Hardly surprising, then, that they have only been able to replace around a quarter of the homes lost in the same period – 21,720.
This loss of social rented housing serves to help push more families into the private rented sector, driving up housing benefit spending and rents and exacerbating the homelessness crisis.
Right to buy may well have helped many families get on the housing ladder, but it has effectively done so at the expense of those who need genuinely affordable homes for rent.
Indeed, as it further denudes available housing stock, the LGA said right to buy itself faces an uncertain future; unless councils are given the flexibility to set discounts locally and keep 100% of the sales receipts to fund replacement homes.
“It is wrong for the same level of discount to be applied all over the country. Local housing markets differ enormously, and this national discount is impacting on different areas of the country in different ways,” Renard added.
“Given the Government’s commitment to level up powers and investment in local areas across all parts of the country, we would want to see the flexibility for councils to be able to set discounts for their local area.
“The size of discount is also driving a surge in homes being sold under RTB, which councils are unable to keep up with and replace with new homes for those who desperately need them.
“This is aggravating the housing crisis by further reducing the social housing available to councils to support vulnerable people and their families and reduce homelessness.”