Single Aspect Blog

Millions of council tenants would be allowed to buy their homes at half price under government plans to extend the right-to-buy.  The discount, double that currently available, is part of the government’s long-awaited, and much delayed, housing strategy paper, due to be published on Monday.

https://www.guardian.co.uk/society/2011/nov/19/council-tenants-buy-half-price

Of course it remains to be seen if they actually implement this, if those council tenants so entitled can afford to buy, even with the discount, but clearly Cameron and Co. are determined to finish what the Iron Lady could not.

Given the two ways of increasing housing ownership, that of encouraging the private sector to build more houses, or simply flogging off what’s left of what was the nations’ housing stock, they would appear to be going for the lazy option.

I’m not going to repeat what I think about right to buy here, please see my previous article which consists of a lengthy exchange with a gentleman from Wales.

Of course it may never happen. As Adam Gray points out . . .

. . . the best properties have already been snagged: there remain very few council houses (as opposed to flats) that weren’t bought up in the first wave of R2B . . . there is much less attraction to buy a flat on the 12th floor of a tower block than a nice 2-up, 2-down cottage in a garden village estate.

Right to buy 2 damaging policy

and of course the markets are hardly longing to lend large sums of money to impoverished people on council estates.

What I predict will happen is what happened before, with much the same unfortunate results.  Predatory behaviour by management companies intent on paying cash sums to council residents with the right but not the money to buy, to purchase their flats and then move out, handing ownership to the company and leaving an estate filled with transient residents living on housing benefit and assured shorthold tenancies.

“in many London boroughs, property firms have been known to leaflet and cold-call council tenants, offering cash enticements for them to use their Right to Buy on the companies’ behalf.”

https://www.guardian.co.uk/society/2008/sep/30/housing.houseprices

The only way to prevent this will be to make it a legal requirement that the homes bought under RTB cannot be sold on, or at least for ten or more years.

In fact I think the whole thing is a disaster in the making.  What happened before was that council tenants who bought under RTB were more likely to default on their mortgages then others buying private property, following repossession they no longer had a right to housed by the council and became homeless.

Cameron hasn’t thought this through but this is nothing new, since when did the Tories ever have an interest in ordinary people?

From the Guardian, some comments I like:-

sammer

19 November 2011 6:18PM

It used to be called ‘council housing’ where I come from; and to many of my generation it offered (pre-Thatcher. pre-mass unemployment, pre-drug culture) a decent start in life. One nation Tories like MacMillan understood its value to the country.

Most of those who denigrate it never lived in a council house in their life. Yet paradoxically these detractors ,although they loathe the concept themselves, seem desperate to protect it from the ravages of single mothers who (according to Tory urban myth) deliberately get themselves pregnant in order the attain their socialist nirvana!

Now it’s called ‘social housing’ to create the impression that to live in a council house equates to being on welfare benefits. And sometimes it’s even rather preposterously called ‘affordable housing’ (as if any builder would actually build an unaffordable set of houses) I think we should continue to call it council housing, the easier to retain the idea that it belongs to the people of a community and should be under accountable local authority control.

bernardcrofton

19 November 2011 10:59PM

The promotion of the sale of council housing simply further depresses an already depressed construction sector of te economy.

The most comprehensive research into previous sales (google: Alan Murie) showed that “right to buy” buyers had simlar incomes to the council tenants who moved-out to buy private housing. So at least some of those who buy under the new scheme would have bought in the private sector, and at the end of the “chain” someone would have paid a builder to build a home.

I assume that those who buy under the new BIG (society) discount will not be able to sell-on immediately to take the dsicount as profit. The buyers are taken out of the housing market for five or seven years so they can eventually keep their discount.

Bad news for housebuilders then. So what is the reaction of the housbuilders federation? “We welcome anything that prevents the public sector outdoing us on quality and price”.

bernardcrofton

19 November 2011 11:11PM

@ mangohead It would be interesting to know of any research that reveals whether, prior to RTB, property ownership was even an aspiration for most working people.

Yes there was. And new towns also built housing for sale under a variety of schemes. Research generally showed people first and foremost wanted a permanent home (hence the abolition of security of tenure for proivate tenants and the intention of the coalition to abolish security for counmcil and housing association homes .

Second people wanted a decent home and possibly a garden. Hence the cuts in housing standards, to build shoe-boxes.

Only then do people want to consider buying a home for reasons other than the effect of government policy. I.e for good reasons like they want to enhance their own home, express themselves, provide a permanent base for their offspring to return to. As opposed to bad reasons like the rent on your council house is higher than the mortgage under a discount.

bernardcrofton

19 November 2011 11:23PM

Interestingly, this page has a link to an old story about Gordon Brown’s policies to revive the housing market.

His proposals were about doing things that would help housebuyers (including existing ones with mortgage problems) and help housebuilders sell houses and build more to meet the shortage.

In contrast, the coalition proposal – to increase the discount for council house sales – simply takes potential buyers out of the market. At the end of the “chain” those buyers would have enabled housebuilders provide new homeS. Instead, they will sit in the council house they have bought, until they can keep the discount when they sell. The result is fewer homes built, but a reduction in the headline accumulated government debt.

galrita

20 November 2011 9:30AM

And how will these purchasers make up the remainder of the price? draw on their Trust Funds, perhaps? I live on a council estate and there aren’t many people around here who would be able to get a mortgage. 30 years ago it was different, there were middle-aged tenants with steady jobs who’d been in the same family house for years and were able to take on the commitment not only of a mortgage but also the regular management and maintenance fees.

A few years ago I was told by a housing officer that the whole right to buy thing had pretty well died out. So this initiative, no matter how big the fanfare, won’t actually raise enough money to fund new developments.

Still, you couldn’t expect a cabinet of millionaires to know that, could you?