WMN | Councillors call for right-to-buy scheme to be scrapped

c8a2f-13736-pnwmng

11 August 2016

Councillors call for right-to-buy scheme to be scrapped

By Kate LangstonPosted: August 11, 2016

(top right) Cllr Owen

Over the last three years, Devon and Cornwall councils have funded an average of just one new home for every four sold – despite a policy of one-for-one replacements.

Councillors claim this is because the scheme is unsustainable, and warn the problem will get worse if ministers plough ahead with plans to extend it.

Exeter City Council member and portfolio holder for housing, Keith Owen, accused the Government of failing to grasp “the seriousness of the situation”.

Cllr Keith Owen

“As a local housing authority, we are not in a position to replace anywhere near the number of council properties which are acquired by tenants under the right-to-buy scheme,” he said.

“And the situation in Exeter is generally no different than it is through the rest of the country.

“Its getting harder and harder to [replace homes], and its not going to be helped by recent Government legislation.

“The whole idea is badly thought through… I think it has to be scrapped.”

According to new figures from the Local Government Association, the rate at which councils in England replaced homes sold under right-to-buy (RTB) fell by more than a quarter last year.

Their data shows that while 12,246 council homes were sold to tenants in 2015/16, just 2,055 replacements were started by councils.

Government figures show that in Devon and Cornwall a total of 361 properties were sold under RTB between 2012/13 and 2015/16.

In that same three year period, councils only began the process of replacing 87 homes.

In the district of East Devon, the ratio of replacements to sales since 2012/13 has been 4.5 to one.

A spokesman for the council said it had been struggling to fund replacements “for a number of years”.

Right to buy figures for Devon and Cornwall (source: DCLG live sales tables)

“The receipt we receive from Right to Buy sales, after the statutory and significant discount is applied, is insufficient to purchase or build replacement units on a one for one basis,” he said.

“We have purchased and built some new homes over the past few years, but our ability… has been compromised by a recent Government requirement to reduce rents by 1% each year for the next four years.”

“This reduces our ability to finance new council homes as it eliminates any surpluses we have set aside for new affordable homes.”

Cllr Owen shares concerns about rent reductions, as and about plans to fund the extension of RTB to housing associations through the sale of council assets.

He said the forced sell-off of high-value social housing will see local authorities deprived of both the asset itself and income from rent.

“It’s a vicious circle,” he said. “Any money we’ve had in the past to build replacement council houses is not going to be there.

“There’s no sign the government understands the seriousness of the situation.”

A Government spokesman said there is a rolling three-year deadline for local authorities to deliver an additional home “and so far they have delivered well within their sales profile”.

“However, we have always been clear that if local authorities don’t start building replacement homes within the three-year deadline, then we will step in and build them for them,” he added.


What is right-to-buy?

Right-to-buy was introduced in 1980 under Margaret Thatcher’s government, as a means of boosting home ownership

It gives most council tenants the right to purchase their home from their landlord at a discount of up to 35% for a house, and 50% for a flat

Tenants can apply to buy if the property is their only or main home and self-contained, and they have had a public sector landlord for three years

If the property used to belong to the council, but has since been sold off, a tenant might still qualify for “preserved” right to buy

The Government is looking to extend right-to-buy to housing association properties, starting with a voluntary pilot scheme, through the Housing and Planning Bill

Guardian Editorial | The Guardian view on housing policy: a rethink is needed

the-guardian-logo

11 August 2016

EDITORIAL | The Guardian view on housing policy: a rethink is needed

The government has boosted demand but not supply. There are too few new homes, and too many penalties on social housing. It’s not a policy, it’s a disaster
Terraced houses.
‘In the past six years, the party of home ownership has failed to revive home ownership.’ Composite: Alamy

It is very hard to detect what this government thinks a successful housing policy looks like. In the past six years, the party of home ownership has failed to revive home ownership. Far from the Tory dream of a Britain transformed into a property-owning democracy, the median price for a house is now nearly nine times the median income and generation rent struggles to put so much as a toe on the property ladder at all.

Meanwhile, the long war of attrition against social housing goes on: right to buy, almost moribund by 2010, was fanned back into life with new and bigger discounts in the early coalition years. Council receipts from the discounted sales were cut to a third of the sale price, which has to be reclaimed in a slow and bureaucratic process from central government to meet the obligation imposed by Whitehall to replace all right to buy sales. In fact, councils are now building just one new home for every nine sold.

The Local Government Association, representing councils in England and Wales, says a rethink is essential if the right to buy is going to benefit more than this generation. Soon, higher-value council properties will have to be sold too, to fund a new assault on social housing, the introduction of the right to buy for housing association tenants. The latest English Housing Survey found that tenants were paying up to half their income on rent – even more in London. Meanwhile the rent councils receive is being cut year on year. The LGA foresees a £2bn hole in council finances by 2020.

An era of very low interest rates, and the new ability of people with pension pots to invest in property rather than buy an annuity with it, is propelling a huge market in buy-to-let. It has slowed with new higher stamp duty, but the grants designed to support first-time buyers have had only a limited effect as the supply of new homes continues to lag far behind demand, putting the next move out of reach. There are already 1.4 million people on council waiting lists. The cost of housing benefit for tenants in private accommodation is soaring along with rents – and homelessness. Earlier this month, the Resolution Foundation published research showing unaffordable home ownership is not just a London problem but affects people across the whole of the United Kingdom. It is at its lowest level since the early 2000s. The number of new homes started was less than 150,000 last year, the average house price has risen 60% in 13 years, while pay for many people has risen at only a fraction of that rate. On some estimates, in less than a decade there will be a shortfall of at least 4m affordable homes. Whatever its intentions, the government appears to have created a housing catastrophe.

The Local Government Association is controlled by Conservative councillors. It is not a radical organisation trying to challenge government. It merely wants voters able to live in homes they can afford to buy or rent. They know how to do it. Theresa May promised a country that did not entrench privilege. Housing is a good place to start.

 

Guardian | Right-to-buy reform urged as council leaders fear for social housing

the-guardian-logo

11 August 2016

Right-to-buy reform urged as council leaders fear for social housing

Figures show that replacements for homes sold under the right-to-buy scheme fell by 27% last year, worsening the housing crisis

Hilary Osborne
Matilda House in Wapping, London, which is made up of private tenancy and housing association homes
The promise to make discounts available to 1.3 million housing association tenants was part of the Conservative manifesto at last year’s general election. Photograph: Dan Kitwood/Getty Images

Analysis by the Local Government Association (LGA) showed that 12,246 council homes were sold to tenants under right to buy in England in 2015-16, but just 2,055 replacements were started by councils – a drop of 27% on the previous year.

The right-to-buy scheme allows low-income tenants to buy their council-owned home at a sizeable discount to market value. Since it was launched by Margaret Thatcher in the early 1980s, almost 2m properties have been sold by councils across England and the proportion of homes that are social housing has fallen from 31% to 17%. Use of the scheme was slowing until the Conservative government relaunched the scheme in 2012 and quadrupled the discounts available to London tenants.

Right to buy has been scrapped in Scotland and the Welsh assembly last week confirmed that it planned to do the same. The LGA said the scheme could become a thing of the past in England, too, if councils were not helped to fund replacement homes.

The organisation, which represents 370 local authorities across England and Wales, said it expected 66,000 council homes to be sold to tenants by 2020 and that councils would struggle to replace the majority of them.

A further 22,000 homes will be sold if councils are forced to offload higher-value properties to fund the extension of right to buy to housing associations. The promise to make discounts available to 1.3 million housing association tenants was a key part of the Conservative manifesto at last year’s general election.

Screen shot 2016-08-14 at 07.35.07

The LGA warned that the fall in the number of much-needed council homes would exacerbate the housing crisis and increase homelessness and spending on housing benefit at a time when there were 1.4 million people on waiting lists.

The government has committed to one-for-one replacements for all additional homes sold since the scheme was relaunched. However, the LGA said urgent reform was needed to ensure councils could replace housing quickly and effectively.

It said authorities needed to keep 100% of receipts from sales, rather than the one-third they can currently retain, and that discounts should be set locally to reflect regional variations in house prices. Under the existing system, London tenants can get a discount of up to £103,900, while outside the capital homes are sold for up to £77,900 below market value.

The LGA’s senior vice chair, Nick Forbes, said current arrangements were restricting councils’ ability to replace homes and suggested this would mean that eventually there were no more properties to sell. “Right to buy will quickly become a thing of the past in England if councils continue to be prevented from building new homes,” he said.

“Housing reforms that reduce rents and force councils to sell homes will make building new properties and replacing those sold even more difficult. Such a loss in social housing risks pushing more people into the more expensive private rented sector, increasing homelessness and housing benefit spending.”

The Department for Communities and Local Government (DCLG) said the government was prepared to take action to ensure replacement homes were built.

It said: “We’re committed to building the homes this country needs and investing £8bn to build 400,000 more affordable homes. There is a rolling three-year deadline for local authorities to deliver an additional affordable home and so far they have delivered well within their sales profile.

“However, we have always been clear that if local authorities don’t start building replacement homes within the three-year deadline, then we will step in and build them for them.”

Around 40% of council flats sold through right to buy are thought to be owned by property investors now and are likely to be rented out at market rates. Some local authorities have attempted to stave off sales of social housing with new schemes for tenants. Recently, Barking and Dagenham council said it would allow tenants to buy a stake in their homes but would retain a share in each property.