Social housing in crisis as too many homes are sold under Right to Buy

Councils struggling to cover social housing needs

Social Affairs Editor

Councils are facing a crisis in social housing stock as soaring numbers of homes are sold under Right To Buy, experts say.

Local authorities sold 31 per cent more social housing between April and June this year than in the same period in 2013, Government figures published today show. The rise follows a succession of Government incentives to make it more attractive for tenants to buy their council homes.

Social Housing can now be sold at a discount of 70 per cent of its value, with a capped saving of £77,000 across England and £102,700 in London boroughs. The discounts have been causing many councils headaches as they struggle to find the funds - or time - to replace the sold stock.

Catherine Ryder, head of policy at the National Housing Federation, said: “We support measures that help people buy their home, but not at the expense of affordable housing for those in need and languishing on waiting lists. As these figures show, the discounts on offer now are very high, over £100,000 in London, meaning homes are sold at a price that makes replacing them very difficult. Right to Buy needs to be urgently reformed to make sure every home sold is replaced by a new affordable home, otherwise the consequences for the next generation could be severe.”

She added: “There are already nearly 1.7 million people on local authority housing waiting lists across England. Selling off the homes we do have at a price which leaves very little to replace them is making this problem worse. While the Government has promised that every home sold will be replaced, the current figures show this is clearly not happening.”

An estimated 2,845 homes were sold under Right To Buy in the second quarter of this year, up from 2,171 in the same period in 2013. A third of these sales happened in London, where some councils have found they are so short of homes they are having to rent back the properties they recently sold.

The problem of ex-council homes being rented out after people used the policy as a buy-to-let scheme became so acute in Camden that the council even tried to ban it.

In Harrow the council now pays more than half a million pounds renting back homes that it has sold under Right To Buy. Councillor Glen Hearnden, Harrow Council’s portfolio holder for housing, said: “It is an expensive irony that the much lauded Right To Buy has ended up as a financial straightjacket for Harrow residents. It really does not make sense to pay huge amounts of money to private landlords for houses we used to own.

“We haven’t built a council house for the past 23 years, which has further intensified pressure on our housing stock with the London rental market going through the roof. But we are putting right a quarter of a century of stagnation with our proposals to build new homes and regenerate our estates.

He added: “We lose twice with the Government scheme, we lose the property from our stock and then we pay to rent it back. It all adds up to our residents suffering. It feels like we are fighting the fires caused by an overheating housing market whilst the government is stood on our hose pipe.”

The average payment received per home in the second quarter of 2014 was £74,000 up from £60,000 on the previous year. This is in the context of rapidly rising house prices, which were up more than 10 per cent year on year in June 2014. In London homes increased in value by an average of almost 20 per cent.

Housing and Planning Minister Brandon Lewis, said: “The reinvigorated Right to Buy is both increasing housing supply and reducing waiting lists, as every additional home sold is now being replaced with a new affordable home for a new social tenant. Overall, the housing stock grows and more people are being housed. Critics of Right to Buy are enemies of home ownership, and fail to appreciate the wider benefits of helping people move on and up the housing ladder.

“So far, Right to Buy sales have generated £420 million in receipts to be reinvested in new affordable homes, and council house building starts are now at a 23-year high. More council housing was built in London last year than all 13 years of the last Government.”

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