Will extension of Right to Buy really lead to building of new homes?
The Conservatives have announced in their election manifesto that that they will extend Right to Buy (RTB) to all housing association tenants in England.
We will extend the Right to Buy to tenants in Housing Associations to enable people to buy a house of their own… We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the more expensive properties sold off and replaced as they fall vacant. We will also create a brownfield fund to unlock homes on brownfield land for additional housing. (p.52)
The Prime Minister has said that up to 1.3 million could buy they homes at a discount as a result. Under current rules about 800,000 housing association tenants have a ‘right to acquire’ their homes under smaller discounts. The intention of the Conservative party policy announcement is to make the discount more generous and to extend RTB discounts to around 500,000 tenants in housing association homes who currently have no right to acquire their home below the market rate.
The extension of the RTB policy would be funded by selling off the most expensive third of housing association homes, once they were vacant, raising £4.5bn per year. In addition, the manifesto claims that they:
“will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently” (p.52).
It is claimed that the planned £1bn brownfield regeneration fund could provide 400,000 extra homes.
The Right to Buy policy was introduced by the Thatcher government in the Housing Act 1980 a significant amount of local authority housing stock was sold and not replaced due to restrictions on the use of RTB receipts and local government spending more broadly.
However councils have channelled monies through housing associations into social housing which has enabled some new social housing to continue to be built, but the results have been far below what is needed.
Housing associations have built on average 18,800 new homes per year between 1978 and 2013, ‘but this is only a fraction of what the public sector built in the post war era’. The number of local authority-owned homes therefore diminished over time as a result of the reduction in stock and in 2013/14 the total stock stood at 142,900 in England
Housing associations have criticised the announcement by the Conservative Party of their intension to extend RTB to housing association homes, including saying that it could be subject to legal challenge.
The Chartered Institute of Housing and the National Housing Federation, which represent housing associations and the industry also expressed concern about the manifesto commitment.
Ruth Davison, the NHF’s policy director said:
“We fully support the aspiration of homeownership but extending right-to-buy to housing associations is the wrong solution to our housing crisis”.
Given the huge reductions in local authority stock since the 1970s, and that the 2013 increase to 60 per cent RTB discounts has only produced one replacement home for every five sold, there is enormous doubts around the claim that there will really be a significant replacement of the social housing stock.
The UK is currently experiencing a housing crisis across all sectors, from reductions in private home ownership, rising private sector rents to reductions in the availability of social housing.
The widespread scepticism around whether the latest announcement in the Conservative party manifesto on the extension of RTB can help to address these concerns seems very likely to be justified.