Today, I commented on an exclusive BBC news story, showing how councils are spending millions clawing back Right to Buy homes (often paying well over the market value) due to a major social housing shortage.
The fact that councils are paying over the odds to get back Right to Buy housing at a time of a chronic housing shortage shows the myriad unintended consequences of Right to Buy. As soon as you allow social housing to enter private hands, it becomes a sellers’ market. People are not just taking advantage of the huge rise in property prices but the fact that councils are clearly desperate for this property – they can effectively tell sellers to name their price. This surely reflects the fact social housing in the UK today is a total mess. Right to Buy was a disaster for housing supply at the time, and it has been a disaster for cash-strapped councils today.
The intentions behind Right to Buy seemed reasonable in giving people the chance to own their own homes when they might have otherwise have been unable to. However, Right to Buy only really works if housing supply keeps up with demand, and for various reasons, housing supply has fallen way behind. Also, the inherent unfairness with Right To Buy is that you simply needed to be in the right place at the right time to benefit, both in terms of taking up the offer but then also selling up.
As with social housing in general, you always find cases where people gain from the system, and others are left out. In this particular case, the unfairness is accentuated by the fact that someone who could take advantage of Right to Buy has not only benefitted from living rent-free for 20 – 30 years but now can pocket inflated profits by selling at a time when councils are desperate for homes. They have lucked out from an extraordinary period of house price rises, unprecedented pressure on the housing system and major flaws in how this scheme was devised.
If I was a young private renter struggling to pay my bills, let alone save for a deposit on my first home, I would be very angry to think that nothing is being done to stop people using Right to Buy in this way. In a way, you can’t blame the sellers for wanting to get the best possible deal, not least because huge price rises mean they need to think about what that money will buy them in the local area. You have to blame the councils and government policy for allowing us to get to this point
One of the big problems stifling house building is the one-sided relationship between councils and developers, who can sit on land once they have acquired it, waiting for it to grow in value. Permissions need to be revoked or fines need to be issued in these cases to avoid much-needed land going to waste in this way. Councils also need to engage in as much creative thinking as possible, using empty and under-occupied land for the greater good. For example, a recent report found that 16000 homes could be provided in London alone by councils if they converted the garages they own into one-bed flats – ideal starter homes for the many young people who are being locked out of all the opportunities that London has to offer and will be vital if the capital doesn’t want to lose its youth, energy and essential services post-Brexit.
What do you think? Tweet me @ionayoungmoney or leave a comment…