Housing professionals urge proper replacement of right to buy sales


Two recent surveys show how much concern there is among housing professionals about the failure to replace houses lost through right to buy. First, in March, in responding to the LGA’s housing self-financing survey, 71% of authorities said that the rules about capital receipts fail to let them build sufficient houses. Then a recent CIH member survey showed that one of their top three demands was to be able to make better use of right to buy receipts (see the graphic above). This is hardly surprising when the latest figures show sales to have risen to over 10,000 over the twelve months to last September (in DCLG live table 691), compared with just 4,000 for the twelve months before that. Over the same period when councils were forced to sell more than 10,000 homes, they were able to build less than 1,000.

The government’s pledges to replace right to buy sales were always qualified as applying only to the sales generated by higher discounts, which for the past two years have been at a maximum of £75,000 outside London and (for the past year) £100,000 in London. Furthermore, local authorities were expected to finance no more than 30% of the cost of a new house from receipts, funding the rest from other sources. The final twist was that replacement units have to be let at Affordable Rents, so they are not really replacements at all.

Even so, one-for-one replacement now looks like a sick joke. And what has been the government’s response to the haemorrhaging of social-rented stock? – to further promote the right to buy. It wants to reduce the qualifying period from five to three years through the coming Deregulation Bill. It’s going to appoint right to buy agents to facilitate sales and waste £100m in the process. And Eric Pickles wants to increase the maximum discounts still further and ensure that in future they keep pace with inflation.

As CIH pointed out in commenting on the original plans to ‘reinvigorate’ the right to buy, the problem with setting ever higher discounts, combined with the complex rules about reusing them, is that there simply isn’t enough money left in the pot to pay for replacement housing at local level. Apart from the rather blatant evidence provided by the new build statistics, the predictions made by CIH are also supported by the latest figures on capital receipts.

DCLG live table 692 shows that receipts in the past year (the money that came in after allowing for discounts) totalled £665m. Given that councils can build a house for an average cost of £125,000, these receipts could have financed over 5,000 new homes. They won’t of course, because the Treasury siphons off a hefty proportion of receipts and also imposes the rules noted above about replacements. The effect is to give far more priority to repaying debt than to building new homes. In other words, the right to buy offers the perfect combination for the coalition government: it helps to reduce government debt, it promotes home ownership and it cuts the numbers of council homes by ensuring that the best ones are sold off at knock-down prices. A better Tory housing policy is difficult to imagine.

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2 Responses to Housing professionals urge proper replacement of right to buy sales

  1. Pingback: What hopes for the Elphicke Review? | Red Brick

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