Election 2015: Cameron unveils right-to-buy shake-up in Conservative manifesto – and it will make the housing crisis worse, not better

One chart that shows right-to-buy will make the housing crisis worse, not better

Hazel Sheffield
Tuesday 14 April 2015 11:43
The first private owners of flats at LendLease's Trafalgar Place development in Elephant and Castle are due to move in this month
The first private owners of flats at LendLease's Trafalgar Place development in Elephant and Castle are due to move in this month

David Cameron's manifesto pledge is to extend the right-to-buy scheme for social housing tenants in England should the Conservatives be re-elected on May 7.

Critics say that far from helping people buy homes, the policy could inflate house prices further and deepen the housing crisis.

The policy revives Thatcher's 1980 right-to-buy scheme and could see another 1.3 million tenants buy their authority-owned homes with a discount of up to £100,000.

But it does nothing to address the demand for homes, which is estimated that 240,000 new builds a year. In 2014, under 120,000 were built – as the chart below shows.

Conservative policy emphasising taxation and borrowing, rather than homebuilding, has encouraged the inflation of house prices.

Recent examples include changes to pension rules, giving people over 55 the right to access cash to invest in assets like housing, or new plans to introduce a help-to-buy ISA for first time buyers.

This pushes up house prices, which makes residential housing an attractive investment for property developers like LendLease. LendLease has already sold all of the privately available flats in its Trafalgar Place development in Elephant and Castle, though affordable housing is still available at the development, according to a spokesman.

The first of 235 new flats with prices starting from £310,000 for a one-bedroom flat have already gone on sale in Asia, while Londoners hoping for to join the housing market have complained of having their dreams dashed after finding out that the cheapest price for a modestly priced flat is £605,000.

"The expansion of Right to Buy may be good politics, but represents terrible policy," said Adam Challis, head of residential research at JLL. "This is exactly the kind of short-termist thinking that the countries' 3.8m million social housing tenants don't need."

In England 1.78 million homes have been sold under right-to-buy since it was introduced by Thatcher in 1980, coinciding with a massive slump in house building, as the graph shows.

Challis said right-to-buy benefits a select few while condemning the vast majority to longer waiting lists and fewer choices.

Hannah Maundrell of Money.co.uk said that more should be done to make sure consumers can access housing, not just landlord investors. "Building more properties will not only make it possible for more wannabe homeowners to get on the ladder, but also help support our construction industry, and alleviate some of the upward pressure on house prices.

"However, with any such plans it’s vital that measures are put in place to ensure that it’s consumers, and not landlord investors, that get to put their name on the deeds," Maundrell said.

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