It is a good few weeks since a new blog post has appeared on this site. Since l4h has been busy with various training projects, time has been a bit scarce. But as housing is back in the news it seemed like a good time to put some of my thoughts down in writing. The main subjects that are currently occupying my mind are: the resurrection of the right to buy; the tenant scrutiny role; and what might be emerging in the Localism Bill. Of course these are all interrelated as they are all important aspects of the developing shape of coalition housing policy. Mr. Shapps would no doubt also point to other elements of policy, but for now, these are the ones that seem to be exercising my mind. Clearly these are just my own musings, and whether people agree or disagree is up to them, but hopefully, they might be read as part of the on-going debate around these issues. Let's take each subject in turn...this post will look at some points about the right to buy. Future posts will examine the other issues in due course.
Fanning the Flames of the Right to Buy...
Mr. Cameron's announcement at the start of the Conservative Conference that the right to buy is to be given a facelift led to not a few raised eyebrows in the housing profession. Surely this was yesterday's policy which although had achieved the success that was intended by Mrs Thatcher, it had become much less popular and less relevant for a range of reasons. Mr. Blair's watering down of the benefits of the policy, the general downturn in the economy and the related difficuly in securing a mortgage, and the simple fact that most of the better quality stock had already been bought at hefty discounts, had all contributed towards a significant decline in the number of sales. It did come as a bit of a surprise therefore when Cameron announced to Andrew Marr that he was intending to administer emergency CPR to the dying patient. But, he explained, this time it would be different...
Now I have always had conflicting views on the right to buy. Whilst I would not seek to deny the aspiration of home ownership to those who desire it, I have always had a difficulty with a policy which sought to meet this aspiration at the expense of people in housing need and who could not aford to buy their home. Since Mrs. Thatcher introduced the right to buy in the 1980 Housing Act, there have been around 2 million council homes sold to sitting tenants. These sales have generated vast amounts of capital receipts. In fact the sale of council housing has generated more money than all the other privatisations put together, this despite discounts being available up to 70 percent of market value. Under current rules, councils only retain 25 percent of the proceeds, with 75 percent going to the Treasury. The revamped scheme, according to Cameron and Shapps, will introduce higher discounts (which were reduced by Blair), and the use of 100% of receipts - presumably by central government - to support the building of new rented housing. Cameron has promised that for each home sold under the new scheme, one will be built to replace it. Although this might seem to present a degree of feasibility at first glance, there are two major flaws when one looks a little closer.
First, any large scale sales drive will clearly have a detrimental effect on the ability of councils to provide much-needed homes for people on their lengthy waiting lists. Although homes will continue to be occupied by the same people, the natural turnover of vacant properties will diminish - particularly as a proportion of those who can afford to buy would presumably leave the social sector anyway to take up owner occupation elsewhere.
Secondly, the additional rented accommodation that will replace these homes will be let under the government's controversial 'affordable' rent model, which sets a rent up to 80 percent of private sector rents. So a socially rented home, let at a genuinely affordable rent, will be replaced by one which is likely to be out of reach for many poor families.
Answers to questions on just how this will be achieved, where these homes will be built, and how councils will be expected to help families in dire housing need, are eagerly awaited. The government is to publish a housing strategy next month, when we should learn how the scheme is likely to work in practice.
Even with the retention of 100% of the receipt I cannot see how even one 'new affordable' rented property could be created??
ReplyDeleteIn our district we are funding an RP to buy back ex RTB proerties and let them at 80% market rent on 5 year tenancy but the subsidy we need to invest to achieve just a 2 bed flat is over £80,000 the RP raising the rest and servicing their debt with the rental stream....even a moderately discounted sale on RTB will not generate £80k and we are a high value area - so where is the balance to come from. Clearly RPs can buy back or at least buy on the open market but it will be even harder to collect enough discounted receipts to fund the purchase of land and the build contract for a new build scheme...?? and where is the land to come from if new build route is proposed?
This is problem enough - as you point out, where (if) it does work the replacement is not a like for like tenancy - who is supposed to occupy these higher rent homes? The same needy people who float to the top in the various CBL systems who are often unemployed and totally dependent on housing benefit or those further down the needs list who are working and may only need a bit if any of HB to fund the rent? We are in danger of creating more multi-tier communities potentially within the same block of flats - different tenures is one issue but some families will be locked in to benefit dependency even more on the new affordable rent whilst their neighbour on a social affordable rent CAN afford to go out and get a job adn pay the rent? Doesn't seem fair or equitable does it?
RTB did its damage adn we have moved on - if we want these people - marginal purchasers I suggest - to buy a home of their own we shopuld give them free equity laons to buy what they can afford say half of (or less) on the open market and free up the void for reletting.... makes MUCH more sense. When they then sell the LA gets the equity loan back with profit or sharing the loss and the funds are available to re lend for free to the next tenant who can afford it.
Clever LAs will use schemes like this and fund from commuted sums receipts from private developers where the otherwise on site new build was not suitable for affordable and this does not cost the tax payer a penny!???
Pleas Mister or should I say MINISTER, think about these ideas before pressing on with RTB reform