This morning David Cameron announced an extension of Right-to-Buy to housing association tenants, affecting up to 1.3 million households. After living in a property for three years, social tenants wanting to buy their home will be able to at huge discount from the market price for houses (starting at 35%) and flats (starting at 50%).
For each additional year they have lived there, tenants will receive an additional 1% (for houses) or 2% (for flats) discount up to a capped amount of £102,700 in London and £77,000 elsewhere. The Conservatives have said that each home will be replaced on a like-for-like basis, funded by forcing councils to sell their 200,000 most expensive properties across the country.
To the untrained eye, the policy may seem like an opportunity to give those on lower-incomes the opportunity to buy a house, without damaging existing numbers of homes. Yet such a conclusion would be very wrong. In fact, there are huge numbers of problems with the policy:
1. It misdirects public funds that could be better used to solve the housing crisis. The Conservatives say the policy will cost £5.8 billion yet this money could all be used to build new stock of affordable housing. Bribing tenants who are already in secure accommodation with low rents is a gross waste of public funds.
2. The government has a terrible record on replacing stock bought through Right to Buy. In England, only one affordable home has been built for every ten bought through the scheme. Although the Conservatives claim they will all be replaced this time, it hasn’t happened in the past and any reduction in social housing will only exacerbate the current crisis and put further pressure on the private rented sector.
3. The policy ignores the 11 million private renters in England are feeling the brunt of the housing crisis. People in the private rented sector are struggling with rising rents, short tenancies and poor conditions. As house prices rocket, they don’t get an automatic Right to Buy and have to deal with an unregulated sector that does not meet their needs.
4. Right to Buy properties inevitably end up in the hands of Buy to Let landlords. Once properties move from the social sector to the open market, they inevitably end up being rented out privately – about a third of properties bought through previous Right to Buy purchases are now rented in this way. This means property that was secure and affordable is suddenly the opposite and also leads to a spiralling housing benefit bill that is used to make up the private rents of low-income tenants.
5. Compulsory sales of the most expensive properties will exacerbate social cleansing. The most expensive properties held by housing associations will be in areas of extreme house price growth, such as central London. Selling these properties off will mean areas become less diverse and low-income tenants are forced out of areas that have traditionally been mixed communities.
6. This severely limits the ability of housing associations to build the homes we badly need. The UK desperately needs an influx of new social housing if we are ever to build the required 250,000 homes per year. Housing associations base building on its assets and future revenues and this policy may fatally undermine this model, meaning HAs cannot build at the rate we need.
Ultimately government should not be reducing our social housing stock but increasing spending on it. It should not be allowing the private rented sector to grow without greater regulation and rights for tenants. And most fundamentally, it should be looking at the housing crisis in the round, rather than playing off one set of tenants against another. To do so is political opportunism and will hit struggling private renters even harder.
Join our call on the next government to reject this disastrous proposal and sign our petition here.