1. Governance
March 5, 2020

The Right To Buy is now the biggest threat to the Right To Buy, argues LGA

By Jonn Elledge

Councils have good reason not to like the Right To Buy, the Thatcher-era policy which gives council tenants the right to buy their council homes. It was foisted upon them by national government. It forced them to sell assets that they owned and, in many cases, had built too, and to do so at a discount. 

And most annoyingly of all, they didn’t even get to keep the takings: for much of the scheme’s history, those went straight to the Treasury (though they can now hang on to them if they get special permission from the government first). If someone forced you to sell your stuff for a fraction of its value and then ran off with the money, you wouldn’t enjoy the experience either.

So it’d be no surprise if the Local Government Association (LGA), an umbrella group representing councils, might not be wild about Right To Buy either. But it’s come up with a much more subtle strategy than merely hating on it. The problem with Right To Buy, a report published yesterday argues, is not that it’s a poor deal for the taxpayer, or that it’s mucked up the housing market. The problem with Right To Buy is that it’s “threatening the future of Right To Buy”. 

A quote:

Tenants have received discounts of nearly £5bn to help purchase their council home under the Right to Buy (RTB) scheme since the size of the discount was increased in April 2012, new analysis by the Local Government Association reveals today.

While Right to Buy has helped many families get on the housing ladder, the LGA said the scheme faces an uncertain future unless councils are given the flexibility to set discounts locally and retain 100 per cent of sales receipts to fund the replacement of homes sold off under the scheme.

I completely and utterly love the sneakiness of this press release. If zooms past the shocking fact that the government has chucked nearly £5bn at a few lucky people as part of a policy that has always shamelessly being about turning Labour council tenants into Tory voting homeowners. (No such discounts are on offer for private tenants to buy out their landlords, you note.) It doesn’t dwell on the fact the whole policy is frankly insulting to councils, treating them as lackeys for central government rather than democratic institutions in their own right. All that’s in there, but we’re left to infer that it’s bad.

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No: the real problem with Right to Buy is that it’s just endangering Right To Buy. If we keep going like this, the argument runs, there won’t be any properties left to sell under Right To Buy, and where will Right To Buy be then? Surely even this Tory government will be moved by Right To Buy’s plight?

To be honest, I mainly wanted to comment on this campaign tactic (honestly, it’s genius), but since we’ve come this far, let’s look at the rest of the press release. The LGA’s figures – that £4.9bn in discounts – were arrived at by adding up the discounts on the 79,119 homes sold under the schemes between 2012-13 and 2018-19. 

Why start in April 2012? Because that’s when the Cameron government amended the policy, to increase the available discount to £75,000 or 60 per cent of the value of a house/70 per cent of that of a flat, whichever is lower. That is a hell of a discount – so not unnaturally, a lot of tenants have gone for it, and a lot of councils have been left out of pocket.

There’s more. As it stands, councils are only able to use a third of their receipts – already less than the value of a home – to build a replacement. Shockingly, by which I mean it’s not actually remotely shocking in any way, this hasn’t resulted in like to like replacements, and 

…with councils only able to use a third of each retained RTB receipt to build a replacement home, they have only been able to replace around a quarter (21,720) of these homes sold in the same period.

The goverment has promised that homes build under Right To Buy would be replaced by new social homes built using the takings, but that obviously hasn’t happened. Luckily, the government has a plan for this too: blame councils. From a consultation document, dating from August 2018:

local authorities have not been building enough Right to Buy replacements to match the pace of sales and the commitment that every additional home sold would be replaced on a one-for-one basis nationally is no longer being met. It is clear that local authorities need to increase their rate of delivery of new homes if they are to match the growth in sales.

To rectify all this, the LGA is calling on the government to do two things. One is to give councils more power to set discounts, to take greater account of local market conditions. The other is to allow them to keep 100 per cent of sales receipts to build new homes. Whether government will listen remains to be seen.

I do wonder, though, if the first part of the LGA’s argument might just resonate. Right To Buy is totemic in Tory circles, a symbol of how the party helps the ambitious who want to get on blah blah blah. But it is hard to see how it can continue forever, simply because councils will eventually run out of homes to sell. The attempt to extend it to housing associations – forcing non-government bodies to sell assets that the government doesn’t even own! – is a sign that the government is keen to keep it rolling in some form. One obvious next step would be to extend it to the Private Rental Sector – honestly, it’s no sillier than the housing association thing – but every time anyone suggests that the Tories all start spluttering about property rights, as if housing associations and councils don’t have property rights too.

So perhaps the LGA may have found a clever strategy to win a Tory government round to the cause of building council houses. “You want Right To Buy to continue?” its latest press release asks. “Then let us build more stuff to sell.” Worth a try.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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