Right to Buy: Not what it was!

IT WAS ANNOUNCED last week that the Welsh Government had halved the maximum discount available under the Right to Buy scheme in an attempt to ‘protect the social housing stock’.

Earlier this year Communities Minister Lesley Griffiths announced her intention to end the scheme, which has been in existence since the early eighties when it was introduced by Michael Heseltine, Margaret Thatcher’s Environment Minister as part of the Housing Act (1980).

It is hard to think of a single policy which has been so divisive over the last three decades. It is, in effect, an ideological issue; with Free Market proponents on the one side advocating the power and responsibility taken from the state and given to the individual. Opposing this are critics who point to the drastic reduction in social housing over the time period, and the corresponding increases in homelessness and the use of public money to pay private landlords.

In Wales, 138,709 council-owned homes were sold under Right to Buy between 1981 and 2014 – leading to a reduction in the social housing available of 45 percent. Nationally 42% of the population lived in council housing in 1979 – by 2008 this had dropped to 12%.

The sale of council housing was originally meant to provide funds which would enable local authorities to pay back loans and build new properties. However, restrictions were placed on the proceeds of the sales, and councils found that they could not build any new social housing until these loans had been paid off. House building by local authorities in England and Wales dropped dramatically during the eighties, and has never recovered.

The Labour Government initially opposed the policy, but changed their position in 1985. Tony Blair’s government introduced caps on the discount available in areas short of social housing, and in 2005, the rules were changed to stop former tenants selling on the open market immediately after purchase. A five-year minimum residency before becoming eligible for the scheme was also introduced.

The policy was initially very popular among council tenants, and it was considered to have played a major role in Margaret Thatcher’s landslide victory of 1983, when in 1980 she had the lowest approval rating of any prime minister since records began.

However, repossession rates were notably higher than those for people taking out private mortgages, and homelessness across Great Britain trebled over the eighties. Another bone of contention for those opposed to Right to Buy concerned the burgeoning buy to let market, which in many cases saw ex-council housing stock rented out at considerably more than the local authority charged.

Because most of the council housing purchased was of good quality, and as a result of housing shortages leading to applicants being prioritized on the basis of need, many tenants found themselves living in areas of increasing social deprivation. Cuts to council maintenance budgets, and a dramatic increase in council rents contributed to this on a national level, and to some extent made Right to Buy a self-fulfilling prophecy for those who could afford it. By the mid-nineties, 95% of council tenants qualified for means-tested benefits.

There has been a rise in the number of social housing sales in Wales over the last five years, with 544 properties sold last year. In response to this, the maximum discount has been reduced to £8,000 from £16,000. Commenting on this, Lesley Griffiths AM said that “Right to Buy is depleting our social housing stock.

“This damaging policy is further increasing the pressure on our social housing supply and is forcing many vulnerable people to wait longer for a home,” she added.

“This is why the Welsh Government has taken decisive action to protect our social housing and make sure it is available for those who need it most. Today is a significant step towards our eventual goal of abolishing the Right to Buy and Right to Acquire in Wales.”

The Conservatives, unsurprisingly, disagree with this. Speaking earlier this year, Shadow Assembly Housing Minister Mark Isherwood said that the move ‘flies in the face of aspiration and ambition. It will limit supply and deny people in council properties the choice and power to buy their own home’.

Mr Isherwood announced the intention of the Welsh Conservatives to extend Right to Buy: “We would invest all the sales proceeds in new social and affordable housing to help tackle Labour’s housing supply crisis and take households off their record-breaking waiting lists,” he added.

“Scrapping the right to buy is further proof that it’s anti-aspiration; stuck in an ’80s socialist dogma where it believes the government knows best – not the individual. We must use every tool in the armoury to increase housing supply in order to make housing more affordable.”

Whether selling off social housing in order to make money which could potentially be used to build more is a viable solution to these ‘record-breaking waiting lists,’ or indeed whether the aforementioned 45 percent reduction in available social housing could have had anything to do with the current housing shortage remains unclear.

This also fails to take into consideration people living in social housing that is not covered by Right to Buy, and indeed the large number of people renting from private landlords, often because of a shortage of council housing.

In England, the Conservatives have announced proposals which would extend Right to Buy across all areas of social housing. However, the social housing provider would have to be compensated, thus meaning that the discounted price would have to cover the cost of a new equivalent house. This is meant to be funded through local authorities selling off their more expensive council houses when they become vacant, but research has shown that outside of London the figures often fail to add up.