A new Study by the LGA (Local Government Association) has warned that Right to Buy is at risk of being unsustainable. For many, this won’t be a shock at all, and I would argue this policy hasn’t been sustainable from day 1. This flawed policy has largely been responsible for the current crisis in the supply of affordable housing to buy and social housing to rent.
Let's be honest Right to Buy has never been sustainable. Nothing wrong with letting tenants buy their homes but they should have let councils build replacement stock from day 1. #socialhousingcrisishttps://t.co/isKI0Cgx96
— David Walker 🔶🇬🇧🇪🇺🔭📸 #FBPE (@piginthepoke) June 11, 2018
First some history…
In the post-war years, Councils undertook a massive house building program to address the then housing crisis. The large-scale Council House building program after the war was a success.
The Conservative Flagship policy of Mrs Thatcher that allowed Council Tenants to buy their own homes at a heavily discounted rates was flawed from the start… Not just because of the excessive scale of the discount, but more significantly, the fact that they stopped Councils replacing the houses they lost to Right to Buy. Instead, Councils amassed huge capital receipts when they should have been using to build new council housing.
Large Scale Voluntary Transfer of Council Stock to new Social Landlords became the new norm, again with a large discount, in the hope that Social Landlords would fill the void. The Labour Government accelerated Right to Buy and encouraged Large Scale Voluntary Transfers whilst raiding the Capital receipts of well run Council Housing Departments. How much of those capital receipts went into building new housing?
Social Housing Crisis
At its peak in the 70s about 400k social houses were being built by Councils and by private enterprise – roughly 50/50 or 200k each. Fast forward to 1995 and the Council house supply of new houses had all but disappeared with private enterprise building about 150k houses a year right through to 2010.
- Social Landlords haven’t been able to pick up the slack.
- Private Developers interest is in maintaining a lack of supply, rising prices and profits, not what society needs.
- Councils haven’t been able to build new houses.
- The planning system has systematically failed to deliver enough houses in the right places, of the right size or of the right type.
- The build rate has plummeted.
The result has been a shrinkage in the supply of housing, particularly affordable housing to buy or rent which has driven up rents and house prices. First-time buyers have largely been priced out of the market and forced into renting or relying on the Bank of Mom and Dad.
All too often, those houses that are being built are the wrong sort and in the wrong places.
There are some excellent graphics that illustrate the problem in Social Housing in this Guardian Article: How did the crisis in UK social housing happen?
More on the LGA report: https://news.sky.com/story/flagship-tory-right-to-buy-council-house-scheme-under-threat-11401333
Update: See also my top 10 reasons why we have a Housing Crisis
To fix this problem there is no need to scrap Right to Buy and the social mobility that scheme can help to provide, but it does need serious reform.
Instead, factor in:
- Allow councils, with Government support, to borrow money and build new Council Housing where it is needed, or as part of the often muted new garden cities.
- Allow these houses to be sold to tenants in Rent to Buy schemes and plough the receipts back into building more houses.
- Fix the problems in the planning system, whilst still protecting the natural and built environment.
- Use more environmentally sound construction methods.
That would better contribute to a balanced and more sustainable housing policy.
The last 20 years have shown us that the private sector alone can not possibly be relied upon to solve the social housing crisis or the lack of affordable housing to buy.