Jonathan Rolande, founder of House Buy Fast, shares his opinion that the extended Right to Buy Scheme will do ‘absolutely nothing to help those affected by the housing crisis’
Earlier this year, the Government extended the Right to Buy Scheme to housing associations across the country. It was trumpeted to great fanfare. But I wasn’t among those popping the champagne corks. The reason? Sadly the current thrust of the Government’s right-to-buy policy will do absolutely nothing to help those affected by the housing crisis.
Why? Well, at best, one home that is already occupied will be sold with a large subsidy to the current occupier. In its place, another will be built meaning that the number of homes for low earners and the more vulnerable in our society will not change. I am concerned that in reality, the number may even reduce. We may also see the appetite to buy up property outstrip the ability to build replacements given the issues of lengthy planning processes, nimbyism and a shortage of materials and labour.
Comparisons are being made right now with the sale of council housing decades ago, which, if replacements had been built, could be viewed as a success. But I believe the comparison is totally flawed. Don’t forget, council homes were owned by the State and whilst they had a notional value, the money for discounts didn’t have to be found. A property owned entirely by a council and sold for £50,000 even with a 40% discount results in £50,000 appearing in the council’s coffers.
Housing Associations are usually private entities that will need to be compensated for the enforced discount, so it appears that there will be a net loss for the taxpayer, rather than the ‘gain’ of the council house sales. This is a question that needs answering.
Is the extended Right to Buy scheme fair?
I have concerns about fairness too. A housing association tenant will have lived for many years in a relatively secure and well-run home. They will now benefit from a discounted purchase scheme not offered to millions in the more volatile private rented sector. Is that truly fair? And then there is the boast that benefits will now be classed as ‘income’ to obtain a mortgage. Will banks be as sympathetic to missed payments when times get tough as a housing association would have been? I suspect not. And there is a real risk that those just getting by will now be at the mercy of large corporate lenders.
Many that buy in blocks of flats will find themselves liable for high and often variable maintenance costs that they are currently insulated from, potentially pushing them into greater difficulty. It is rightly the ambition of millions to eventually own their own home. However even ignoring the many concerns around this policy, I don’t believe this will do any more than scratch the surface of the real issue – and that’s if this 2015 policy re-launch ever actually happens.
There are some really interesting statistics around this issue which were recently published.
According to research by the Local Government Association, which represents more than 350 councils in England and Wales, since 2012 the average discount has increased by 150% to more than £67,000 in 2020-21.
The Right to Buy scheme is unsustainable, says Local Councils
Councils have warned that the extended Right to Buy scheme is becoming unsustainable, with local authorities struggling to rebuild homes as quickly as they are being sold. In 2011-12, the average discount for a council tenant buying a home under RTB was £26,690, around 27% of the average property value. In 2020-21, the average discount is £67,050, 42% of property value. Since 2012, councils have sold 96,126 homes under the scheme and started building 32,901 homes.
Local authorities say the scheme faces an uncertain future unless councils can keep 100% of sales receipts to fund the replacement of homes sold off under RTB. More than 1.9 million homes have been sold under RTB between its launch in 1980 and March 2021. In 2011-12, 2,613 homes were sold under RTB. In the four years following, sales more than quadrupled to 12,220.
I’d now like to see the new Prime Minister put this policy where it belongs – in the dustbin.
Housing reform seemed to be airbrushed from the debates in the race to Number 10. For millions across the country the fact they are unable to own or rent their own home is causing them much distress. They are rightly demanding answers as to how the situation can be improved.
Major housing crisis in the UK
Make no mistake the UK is experiencing a major housing crisis. Whilst anyone who’s searched for somewhere to buy or rent recently will know this all too well, what’s less discussed is the broader impacts on society. It’s creating massive changes to the way we live, work and think about the future. Put simply, the UK’s housing crisis is one of the biggest challenges we face. Fewer and fewer people can afford high-quality accommodation that meets their needs.
How bad is it? In 1991, 67% of 25-34-year-olds owned their own home. Today, that’s just 11.2% (and 0.7% for anyone under 24). It’s not hard to see why either. According to Rightmove, asking prices increased by over £55,000 this year alone. How many people had a pay rise to match this? Halifax reported average house prices were £289,099 in May 2022. That’s over ten times the median average UK salary of £25,971. Over the past twenty years, the proportion of people living in rented accommodation doubled. According to the Homelet Rental Index, average UK monthly rents were £1,103 in May 2022 – up by over 10% on the same time last year. Prices are rising quicker in cities too, with more people returning to office-based work after the pandemic.
It’s not just the lack of home ownership at stake. The housing charity Shelter claims low-quality housing impacts the health of over 20% of renters in England too.
If you’re wondering what’s behind this, supply and demand play a big role. The lack of housing in the UK is pushing competition and prices ever higher, and wages aren’t keeping up.
How can we solve the housing crisis?
That’s why we need big, bold and forward-thinking policies in this area which provide solutions for the next 10 and 20 years. Whilst there are no easy solutions to the UK’s housing crisis, one thing’s certain, the current supply (both in terms of quantity and quality) isn’t meeting the needs of society. Whether buying or renting, surely people deserve better?
It’s time to start talking about what can be done to truly fix it – once and for all. The UK’s growing housing crisis needs to become more than just a dinner party discussion about house prices. It’s time leaders treated it as the outrage that it really is. And a good place to start would be ditching flawed right-to-buy policies and creating ones which will genuinely help those suffering in this crisis.
I am tired of people saying the Right To Buy scheme is wrong, that it causes homelessness, and it should be scrapped. Actually, it helps prevent homelessness for some people. I am the carer for my disabled mother, and we live in a council house. Due to my mothers disability, neither of us have the luxury of going out and getting a high paid job that will allow us to buy a house on the open market. My mother is the tenant at our property, and I am classed as a lodger. The Council refuse to make me a joint-tenant. This means if anything were to happen to my mother, then the Council would evict me from our home of 30 years, and I would be homeless on the streets. Priority for homeless people is given to the most vulnerable, and not single adult men like myself. If something happens to my mother, it would take time for me to find work, and by then I could be homeless on the streets and find it almost impossible to get a job. Our only hope is to buy our Council home under the Right To Buy scheme, not to sell the house afterwards, but to live in it as a home. And when I hear people complain about rich landlords buying all the Council properties, those people don’t realise the rules, that Council properties can only be bought by the tenants and can only be sold without paying back some of the discount after five years. Our house might cost us a mere £40,000, and yet that is an absolute fortune which we cannot afford and need a miracle even with a very cheap mortgage. Every day is a struggle caring for my disabled mother, without the constant fear of getting evicted someday. So instead of criticising the Right To Buy scheme, perhaps have a thought for people like my mother and myself who need Right To Buy to stop us from being evicted onto the streets.