May 13, 2024 9:16 am

Insert Lead Generation
Nikka Sulton

Since its inception, the Right To Buy scheme has seen a significant portion of council properties being acquired by private landlords, with over 40% now under private ownership, as revealed by the New Economics Foundation (NEF). Over the span of the last decade alone, approximately 109,000 former council homes have made the transition into the private rental sector, marking a substantial shift in property ownership dynamics.

The NEF highlights a concerning trend whereby the implementation of the RTB policy appears to be steering many households towards private renting, a departure from the original intent of the scheme. These properties were initially constructed to address the growing demand for social housing and alleviate pressure on extensive waiting lists. However, with a considerable portion now in the hands of private landlords, the efficacy of the RTB policy in fulfilling its intended social housing objectives comes into question.

The data provided by the NEF underscores the need for a critical reevaluation of the RTB policy’s impact on the housing landscape. As more council properties transition into private rentals, there arises a pressing need to reassess the policy framework to ensure it aligns with the overarching goal of addressing housing shortages and meeting the diverse needs of communities across the country.

According to findings from the New Economics Foundation (NEF), which conducted a comprehensive study involving Freedom of Information requests to local authorities, significant shifts in property ownership patterns have emerged. In Brighton, for instance, a staggering 86% of properties acquired through the Right to Buy (RTB) scheme are currently under private rental arrangements. Similarly, Milton Keynes and Dover exhibit high proportions of RTB properties, with 73% and 59%, respectively, now privately rented.

Under the Right to Buy scheme, council tenants are granted the opportunity to purchase their rented property from the local authority at a discounted rate. Eligibility for purchase arises after three years of being a social tenant, with discounts increasing annually. This can reach up to a maximum of 70% of the property value, capped at £96,000 (or £127,900 in London). However, the NEF’s study sheds light on a concerning trend whereby a substantial portion of these properties, once intended to provide affordable housing solutions, have transitioned into the private rental market.

Sales of council properties reached their peak during the 1980s, witnessing a significant surge with over 1.4 million homes sold between 1980 and 2000. However, the momentum shifted in 1999 when discounts offered under the Right to Buy scheme were notably reduced. This reduction, coupled with the aftermath of the 2008 financial crash, resulted in a sharp decline in property sales. It wasn’t until 2012, with the introduction of an enhanced version of the Right to Buy scheme, that sales began to climb again, eventually reaching up to 12,000 transactions per year.

In recent weeks, the Housing Forum, an industry group, has advocated for stringent restrictions on the future use of properties acquired through the Right to Buy scheme. The group has proposed implementing covenants on sales, which would either prohibit the property from being rented out or mandate that it be offered to the council for rental purposes if not utilized for owner-occupation. These proposed measures aim to address concerns regarding the potential mismanagement of properties acquired under the Right to Buy scheme, ensuring that they contribute effectively to meeting housing needs.

Critics argue that the current framework lacks adequate safeguards to prevent properties acquired through Right to Buy from being converted into buy-to-let investments, exacerbating the shortage of affordable housing. By advocating for covenants to restrict rental or mandate council offers for rental use, the Housing Forum aims to mitigate these challenges and maximize the social benefit derived from properties acquired through the Right to Buy scheme.

The newly re-elected Mayor of Greater Manchester, Andy Burnham, advocates for either abandoning or heavily restricting the Right to Buy government policy. He emphasizes that Greater Manchester aims to suspend the right to buy policy from any new council homes built in the city-region as part of a comprehensive plan to address the housing crisis. Burnham argues that the Right to Buy policy has hindered the construction of social homes for decades, as councils lack the incentive to fund new home construction when properties can be sold off at discounted rates.

According to Burnham, the existence of the Right to Buy policy exacerbates the housing crisis by preventing councils from replenishing housing stock adequately. He likens the situation to attempting to refill a bath without being allowed to plug it back in, highlighting the systemic challenges posed by the policy. To combat this issue, Burnham proposes the construction of a new generation of council homes across all 10 boroughs of Greater Manchester, with a target of at least 10,000 homes within his four-year mayoral term.

Hollie Wright, assistant researcher at the New Economics Foundation, highlights the significant impact of the right to buy scheme on the housing system, emphasizing the challenges it poses in providing safe, affordable, and secure social homes for millions of people. The scheme’s requirement for councils to sell homes at reduced prices has hindered their capacity to construct new council homes, exacerbating affordable housing shortages across the country.

To address these issues and encourage council home construction, the NEF proposes devolving powers over the right to buy from Westminster to local councils. This includes granting councils the authority to suspend the right to buy in areas where it contributes to affordable housing shortages, as well as discontinuing the right to buy for newly constructed or acquired homes. Additionally, the NEF suggests preventing sold right to buy homes from entering the private rented sector (PRS) and recommends adjustments such as reducing discounts and extending qualifying periods.



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