Options for preserving and delivering new council housing in the twenty-first century
In the nearly four and a half decades since its launch in 1980, the Right to Buy scheme has had a transformative impact on our families and lives. More than 2 million homes have been sold to approximately 4.5 million existing tenants, enabling them to own their own homes and gain hitherto unavailable wealth. For those who have benefited from the scheme, and those who hope to benefit one day, the right to buy provides them and their children with a clear route to financial security, giving them greater control over their future.
However, there is a clear tension between the enduring appeal of the Right to Buy and its role in reducing the number of social rented homes that lies at the heart of our housing crisis. The price of the Right to Buy is huge, eroding one of the UK’s greatest national assets: its social housing stock.
Conditions attached to the right to buy tie councils' hands and prevent them from replacing homes that have been sold. Furthermore, it triggered a huge loss of confidence and ability of local authorities to build new homes. Partly as a result of the influence of the right to buy, in the decades after the Second World War councils went from being at the vanguard of developing new houses to playing a supporting role thereafter.
The task for policymakers is to find a path that recognizes the role the right to buy plays in delivering low-cost home ownership, while reforming policy to strike a better balance. The aim of these reforms should be to reform the right to buy so that it does not exacerbate the current housing crisis but becomes part of the solution.
The report outlines a package of reforms that should see Westminster devolve a range of powers to local government. These will enable councilors to make decisions about the future of their council’s housing stock and give them greater control over the tenure balance of homes in their area. The current one-size-fits-all approach to Right to Buy in England is exacerbating the shortage of affordable housing in high-demand areas. However, devolving purchase powers to councils would put more decision-making power and responsibility in the hands of local politicians who know their areas best. It will also help them reap the multiple benefits of decentralization. Crucially, by reforming the Right to Buy and removing one of the key barriers to council home building, councils can grow their local economies while better meeting local housing needs. Therefore, where local circumstances require, powers should be devolved to allow councils to:
- Suspension of the right to buy if it can be proven that the policy contributes to a shortage of affordable housing;
- Termination of the right to purchase a newly constructed or purchased home;
- Prevent sold properties from being let to the private rented sector (PRS); and
- Reducing discounts and extending eligibility periods above pre-2012 levels should restore them to a new baseline nationwide.
Additionally, Treasury rules should be amended to allow Parliament to better provide replacement stock using receipts:
- Treasury stock should be abolished.
- Caps on receipt usage should be lifted.
- Councils should be allowed to combine revenue with other forms of grant funding.
- Councils should be allowed to transfer receipts to ALMOs and housing companies.
- Caps on using receipts to buy homes on the open market should be lifted.
Supporting the Treasury's move to impose restrictions on the use of receipts is the suspicion that councils will be unable to replace sold homes if left to their own devices. There is little risk that Parliament will abuse these additional powers. Crucially, the current rules themselves prevent councils from replacing homes that have been sold.
This report highlights the Government's wide range of reform options to make the Right to Buy fit for the current housing crisis. Devolving purchase powers will help councils adapt to local conditions while giving them the confidence to build again. This should therefore be a prerequisite and priority for any government seeking to rapidly expand social housing provision and provide a route out of the housing crisis.
