The Right to Buy – taking the long view

Churchill once famously said “Those who fail to learn the lessons of history are doomed to repeat it”.  As we stand at the precipice of a Right to Buy for housing associations (RtBHA), it would be wise to take a pause and look back over the lessons from the council Right to Buy before we take the plunge.  That’s why Professor Alan Murie’s excellent and forensic book “The Right to Buy? Selling off Public and Social Housing” is essential reading for the housing association sector and policy makers alike.  Alan is the UK’s leading academic on the Right to Buy, having undertaken numerous studies into council house sales since the mid 1970’s.  This timely book takes the long view on how the council Right to Buy (RtB) has played out, what outcomes might result from a RtBHA and, learning the lessons, what changes could be made to the policy to improve the future outcomes from a RtBHA.  I recommend you all to read it, but for those who won’t, or would like a taster before they do, below are my insights and thoughts on what Alan’s book raised and how it might point towards some improvements to help avoid some of the pitfalls of the policy.

Alan provides a valuable understanding of the context at the time of the introduction of the RtB in 1980.  Following a substantial council house building programme the nation had never been so well housed.  Almost a third[1] of all households were living in rented public housing that tended to be more modern and of higher quality than the private sector.  Many council tenants were on higher incomes than those private renting and paid higher rents than those on regulated rents in the private sector.  This large public housing asset had very low levels of debt, having been largely paid off in recent years.  Alan highlights that there was a belief at the time amongst many Conservatives that the council housing sector had become too large, that it was crowding out the private sector and that a smaller council sector would stimulate the private sector “fill the gap” and increase investment.  It’s worth recalling that the Conservative Government attempted to include housing association homes in the legislation for the RtB (an attempt that was fought off by the House of Lords).  Unlike the recent “reinvigorated” council RtB and the RtBHA there was no commitment to use receipts to fund replacement – though Alan notes Heseltine at the time promised a Conservative government would build around 60,000 council homes per year into the future – a commitment that was clearly not delivered.  In subsequent years, successive Conservative Governments further increased discounts and widened eligibility to encourage additional sales.  These discounts were temporarily drawn back by Prescott in the New Labour Government post 1997, though of course were undone again under the “reinvigorated RtB” under the Coalition Government from 2012.  What will prove an interesting and value comparison one day, in contrast to England, both Scotland and Wales have moved over time to curtail and now effectively abolish the RtB.

So how did things play out?  Looking back, what emerges is the nature and size of impact of the RtB evolving and increasing over time.  The better off and long standing households bought first, buying the better quality stock more likely to be houses, larger homes, in rural areas and the shires and in better off areas with already high levels of homeownership.  These households tended to stay living in their homes after buying meaning there was a limited impact between their tenure changing.  However, in later years, younger households began to buy with sales moving more towards flats, smaller properties and urban areas.  These households were more likely to move home sooner after buying, bringing resales into the market.  Although this new source of housing stock for sale no doubt helped to support rising homeownership rates, many found their way into the hands of private landlords with Alan estimating that between 30 – 40% ending up in the private rented sector.  As council stock was sold and not replaced, the total stock of council housing (and social housing in total) continued to decline.  The vast majority of households housed in social housing are housed as vacancies arise (relets) in the existing stock (rather than from newly built homes) as households move home or die or “dissolve”.  As such, as the total council housing stock declined this pool of relets that would otherwise have been made available continued to decline meaning less and less households in housing need being able to be housed in sub-market rented homes.   More and more households in need who were increasingly becoming dependent on housing benefit spent longer and longer time on higher rents in private renting or temporary accommodation.

Looking back on the legacy of the RtB, although clearly the policy was highly beneficial for those households lucky enough to have bought (and spectacularly so in many cases), Alan paints a picture of a policy that over time has brought about a number of large scale detrimental structural impacts to government and society.  Instead of increasing social mix, through the type of homes sold and resales into private renting, the policy has brought about increased concentrations of deprivation.  By enabling better off households to leave and through a reduced social housing stock for new tenants the policy has brought about a “residualisation” or a more deprived profile of households living in social housing.  By reducing the available council housing stock and housing people longer in private renting and temporary accommodation the policy has helped to increase the costs of housing benefit.  Finally, the recent steep rise in the discount rates of this publicly owned asset has increasingly represented poor financial value for money to the taxpayer and a windfall to buyers.  Fundamentally Alan feels that the policy was largely pursued in isolation, with very little strategic thinking of the wider implications, resulting in a range of perhaps unintended consequences, which he believes helped contribute to the housing crisis that we face today.

Looking forward to the introduction of the new RtBHA, although again the policy is an opportunity for many more households to own their own home, the policy risks this time around are arguably greater than they were under the original RtB in 1980.  Unlike in the 1980’s when many felt the council sector had over-reached, social housing now houses around half of what it did then or just 17%.  We also of course face an unprecedented shortage of housing of all types and an accompanying affordability crisis.  Although a big improvement this time is a commitment from associations for replacement of at least one new homes for each one sold, Alan raises concerns that these may not be affordable to those in housing need and may not be provided in those areas and of the right size and type for those in highest housing need.  Exacerbating this shortage of social housing and in contrast to the 1980’s, this time we have a policy partly funded through the sale of high value council housing which, similar to the RtB, risks resulting in further concentrations of deprivation.

[1] 31.2% of households lived in council or housing association properties in 1981

0 Replies to “The Right to Buy – taking the long view”

Leave a Reply

Your email address will not be published. Required fields are marked *