Friday, 30 January 2015

Report finds 52,000 right to buy homes in London now rented privately

Nearly half the homes sold under right to buy in some of London’s poorest boroughs are now owned by private landlords, a new report has revealed.

The research revealed 52,000 council homes sold in the capital under right to buy are now rented out privately.

This represents 36 per cent of the homes sold since the policy was first introduced in the 1980s.

In Enfield and Tower Hamlets, two of London’s poorest boroughs, 50 per cent of the homes sold through right to buy are now estimated to be in the private rented sector.

The research, conducted by Labour London Assembly Member Tom Copley, said 271,438 home have been sold through right to buy in the capital with only 880 replacements built by 2011.

He branded the policy ‘Whitehall-sanctioned robbery of the taxpayer’.

‘Right to Buy has played a central role in causing and exacerbating the current housing crisis,’ he said.

‘Future governments must recognise that the right of a council tenant to buy their home at a discount, subsidised by other taxpayers, cannot be at the expense of the right of the vast majority of people to have a decent, affordable home to live in.’

The report recommends mandatory covenants to prevent right to buy properties being let privately, an end to the current system of discounts and a ‘right not to sell’ for local authorities.

Since April, tenants in London have been able to receive a £100,000 discount on the purchase of their council house.

The government has promised one-to-one replacements for every unit sold, but in 2012/13 and in the year to date, 10,954 council homes have been sold nationwide, with only 1,662 replacements started same period.

Mr Copley conducted the research through freedom of information requests, generating his estimates by checking the number of properties where the council owns the freehold but not the leasehold, and where the leaseholder is registered at an away address.

Andrew Boff, GLA Conservatives housing spokesman, said: ‘Right to buy has been enormously beneficial to millions of council tenants over the past thirty years.

‘The recommendations in this report would effectively dismantle right to buy, because you cannot meaningfully buy or own something with so many restrictions and clauses on what you can do with it. By the very figures contained in this report, almost two thirds of right to buy properties are still owner occupied, therefore any measures that damage this successful scheme will mostly hit people who work hard and aspire to own their own home.’

Readers' comments (38)

  • What is the point of RTB?

    Unsuitable or offensive? Report this comment

  • Well done IH for bringing this to the fore. Excellent journalism. The irony of this is beyond funny.
    Under the 'sheep's clothing' politics of allowing hard working tenants to own their homes - this shows the 'wolf' of publicly-funded profiteering underneath. It gets worse when we begin to consider that some landlords own as many such properties as social landlords! The simplest solution seems to be a) categorise what is social housing and b) remove the rights of private entities, not contracted to councils, to rent deemed social housing under AST/license agreements. I wonder how this can stop?

    Unsuitable or offensive? Report this comment

  • Joe Halewood

    Cost to public purse anyone?

    A SRS property may have a rent of £150pw in London and a PRS £400. A difference of £250pw or £13k per year.

    If two-thirds of the the now PRS rented properties have HB claimants in them then this is circa 35,000 properties, each of them will cost the public purse in HB £13k more in HB than if they were still in SRS

    That's a £455m per year additional cost to the taxpayer in HB, OR it is £75m MORE than the nationally claimed saving from the bedroom tax (£380m - based on 523,000 at £14pw)

    AND that is just London's RTB!!!

    Unsuitable or offensive? Report this comment

  • I suspect we may be missing the underlying cause driving the figures behind this story. Ex council housing is often only available to investors/cash buyers due to the ongoing lack of mortgage support for the product. Cash buyers/Investors tend to the rent the homes out, in a way I'm surprised the figure isn't higher.

    Unsuitable or offensive? Report this comment

  • John Moss

    RtB homes will be in less valuable locations so when the RtB buyers move out, they will be providing homes at the lower end of the market. they are subject to clawback on sales within a period of time, perhaps "no-letting" clauses would also be sensible?

    The alternative to RtB is for households whose income does not warrant a social rented tenancy, benefiting from a very low rent, while others languish on waiting lists.

    With RtB, the cash is extracted (rather than the household) and under the rules introduced in 2011, the receipt must be used to provide new homes. (Previously, it was used to re-pay housing debt.)

    In London, where land is the most significant single element of the cost of a home and where councils have "free land" on existing estates - as demonstrated by Wandsworth - new homes should be capable of being provided on a one-for-one basis, if not better.

    Unsuitable or offensive? Report this comment

  • Rearrange the words 'horse, door, stable, bolted' for the story here. BJ why should 'hard working tenants' get a massive discount on a public asset? If they rented privately, could they expect their landlord to be forced to sell to them at huge loss? Good journalism, IH.

    Unsuitable or offensive? Report this comment

  • Most houses are bought on a freehold, not a leasehold. So these figures presumably only relate to flats bought under RTB.

    You would expect more flats to end up rented out than houses. Houses are more popular with people buying a family home to live in. Flats are more popular with landlords as they're easier to maintain (no garden, etc).

    Unsuitable or offensive? Report this comment

  • Gavin Rider

    Exasperated Me - "what is the point of RtB?"

    It converts a social tenant into a homeowner, reducing the demand for social housing by one household. It also reduces the stock by one house. Net current difference in availability = ZERO.

    The money paid for the housing, even after discount, is always more than the cost of providing the house in the first place and of maintaining it since it was built. The net cash flow to the public purse is therefore positive for all RTB sales, so RtB benefits the taxpayer.

    Had those homes not been sold through RtB, they would probably still be occupied by the original tenants or their offspring, so would not be available to anyone else for rent; neither social tenants nor private.

    They would therefore probably not be available to help reduce the HB bill as Joe Halewood likes to suggest with his grossly exaggerated calculations.

    Unsuitable or offensive? Report this comment

  • "It converts a social tenant into a homeowner, reducing the demand for social housing by one household. It also reduces the stock by one house. Net current difference in availability = ZERO". That's not so, because social housing that remains social housing becomes vacant and is passed on to the next person on the waiting list. People move on or die and the property is still available to let at a reasonable low rent. Or was, until RTB and relets at the unnaffordable "affordable rent".

    Unsuitable or offensive? Report this comment

  • keeping a unit at social rent, rather than selling it on and then renting it out again for twice or three times as much, does of course keep the HB bill lower.

    Unsuitable or offensive? Report this comment

View results 10 per page | 20 per page | 50 per page

Have your say

You must sign in to make a comment

sign in register

Newsletter Sign-up

Related

Articles

IH Subscription