Right-to-buy is Buy-to-let goldmine

By Paul Dimoldenberg

A report to today’s meeting of Westminster City Council’s Housing Scrutiny Committee shows that more than 3,500 former council flats are now owned by landlords, often charging more than four times a council rent.

The report reveals that the Council has sold 9,135 (45%) of its 21,243 Council flats under the Right-to-buy and that 3,603 (39%) are now sublet and “owned by small and multiple landlords”.

Former Council flats in Westminster owned by Buy-to-let landlords are now rented out at more than £500 a week, over four times the average rent of Council flats, and are out the price range of the vast majority of Westminster residents in housing need. The transfer from public to private ownership has a huge cost to the public purse as many of the Buy-to-let landlords are being subsidised by thousands of pounds of Housing Benefit payments.

The Right-to-buy has transformed many Council estates in Westminster into Buy-to-let goldmines for private landlords. Rather than meeting housing need, some of Westminster’s Council estates are now providing Buy-to-let landlords with increasing financial returns as rents continue to escalate, often with the help of a huge Government subsidy. Meanwhile Westminster residents in overcrowded conditions have to wait even longer to get rehoused.

We need a massive building programme of new homes at social rents right across London and an end to the current sell-off of more Council property. Westminster’s housing stock of homes for those on low incomes has been almost halved over the last 30 years. No wonder there is a housing crisis of epic proportions. When will the Government see sense and reverse its damaging housing policies?”

Councillor Paul Dimoldenberg is Leader of the Labour Group on Westminster City Council.

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6 Responses to Right-to-buy is Buy-to-let goldmine

  1. Pingback: Single Aspect's Blog » Blog Archive » Right to buy – Frank Field vs Keren Suchecki

  2. Pingback: How right to buy sales push up the benefits bill | Red Brick

  3. Pingback: Buy-to-Let Landlords see their property investments hit by this recession – Mortgage Advice

  4. nigel sprigings says:

    I have just submitted a final draft of an article to an on-line journal that uses detailed research in one local authority area to look at the relationship between the RTB and the PRS and speculates on the additional cost to Local Housing Allowance. We look at detailed evidence from one authroity, studies of several others, and use this to extrapolate to national level expenditure. Should be available at People, Place and Policy online soon through Sheffield Hallam University.

  5. Jenny says:

    About ten years ago I was living in London renting a room in a former council flat in Tower Hamlets. The landlord, who I think was the former tenants son, was letting each of the three bedrooms to different individuals/couples and letting the living room as a bedroom too. I once worked out we were paying him almost £1500 a month to live there and given that was ten years ago the rental income can only have increased. No wonder these homes are seen as a potential gold mine for those fortunate enough to be able to buy.

  6. What is still unclear from this is how many of the former RTBs are now in receipt of LHA or HB.

    Westminster has 8320 HB claimants in the PRS and so if all the RTBs now in the hands of small PRS landlords were receiving benefit then 43% of the entire PRS HB bill in Westminster is made up of former RTBs. This has huge ongoing public purse cost implications.

    I have just noticed that Westminsters LHA rates are NOT on the governments own LHA website – https://lha-direct.voa.gov.uk/search.aspx – (anyone know why??) so the cost is difficult to compare with average social rents they once were, yet using LHA capped rates we can arrive at a figure of circa £30m more per year being paid out in HB just in Westminister alone and could be as high as £60m more each year in extra HB cost.

    Strangely, I dont see this implication and inevitability in any impact assessment this government has issued on RTB!!

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