Rethinking Right to Buy

6 September 2018

Luke Heselwood

The provision of social housing has been high-up the political agenda this summer – and the stats tell us why. Official figures revealed that in 2017, 1.16 million households were on waiting lists for social housing. Although this is a decrease from 2012, where it reached 1.85 million, the quantity of social housing has also been on the decline. In 2016/17, there was a shortfall of 800,000 social homes and an 11 per cent drop in available homes from the previous year – equating to nearly 40,000 fewer social houses.

This disparity between the supply and demand of social housing has meant that 65 per cent of families have been on a social housing waiting lists for a year, and over a quarter have been waiting for more than five. With the chasm between supply and demand showing little sign of closing, it may be time to rethink the Right to Buy policy, to ensure that social housing is easily accessible to all those in need.

The sale of social housing has a long history. In 1956, for example, nearly 6,000 homes were sold in one month. The 1980 Housing Act formalised the process, in what has become known as the “Right to Buy” scheme. The scheme proved to be popular with the public, giving council tenants an opportunity to get on the property ladder, at a discounted rate of up to 50 percent. In 2012, Right to Buy was given new life as the maximum discount was raised to £75,000 across the country and £100,000 in London. By 2016, Right to Buy was further extended beyond houses owned by local authorities, to include housing association properties.

Since its inception in 1980, nearly 2 million social houses have been sold through Right to Buy – a demonstration of its popularity. Between 2011-12 and 2016-17, the sale of social housing has increased by over 400 per cent and £3.5 billion of public money has been used to help 60,000 people buy their home. These sales have, of course, been beneficial for those who were able to buy their homes. However, it has also contributed to the depleting number of social houses and the large gap between supply and demand. In addition, 40 per cent of houses sold under the scheme are now privately rented at higher prices than social rent.

Going forward, government should ensure that social houses are kept for their original use – to house those unable to rent privately or buy their own home. By doing so, it can stop social housing numbers from diminishing, and ensure that every new house built is an addition, rather than a replacement, to the current stock. As it stands, the number of houses being built cannot solve the supply and demand problem. In part, this is because local authorities only receive a portion of the revenue from Right to Buy receipts, with the rest going to central government. In addition, councils are restricted to spending 30 per cent of Right to Buy receipts on replacement social housing – making the 2012 pledge of one house built for every one sold an unlikely target.

The 2018 Social Housing Green Paper made some strides to tackle the social housing crisis. It said that the Government is “exploring” new flexibilities over how local councils spend Right to Buy receipts to help replace properties that have been sold. Giving local areas more power over Right to Buy receipts is a welcome start that will ensure that local authorities can respond to local housing needs. However, the Green Paper also included a proposal to enable social housing tenants to buy 1 per cent of their home each year, demonstrating a renewed commitment to the principles of Right to Buy.

Promoting home ownership through Right to Buy has helped a generation of tenants to become homeowners. Yet, if this is at the expense of social housing, it risks those who are unable to afford the rising price of private rent becoming another figure on a waiting list. With calls for the Government to spend more on other public services and a clear need to retain social housing, it may be time to rethink Right to Buy.

In the coming weeks, Reform will be publishing a range of blogs exploring the future of housing policy.

Dr Luke Heselwood, Researcher, Reform

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