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The future of the Right To Buy (RTB) scheme lies significantly in the decisions of Deputy Prime Minister Angela Rayner. During Harold Wilson’s tenure as Labour Prime Minister in the late 1960s, approximately a third of the population in England resided in council housing. Fast-forward to July this year, under Prime Minister Keir Starmer, and that number has dramatically diminished to around 16%, which translates to roughly four million individuals.
Since the implementation of the RTB scheme by Margaret Thatcher’s Conservative government in the early 1980s, around two million council properties have been sold to tenants at reduced prices. Michael Heseltine characterized the introduction of RTB as “laying the foundations of one of the most important social revolutions of the century.” However, questions arise whether selling these council houses at discounted rates has merely contributed to an escalating housing crisis.
Waiting Lists
Historically, the funds generated from council house sales have proven inadequate for new construction projects—an oversight that is critical as approximately 1.3 million people currently await social housing in England. For instance, in the north-west of England, over the last decade, around 4,350 council houses have been sold, with proceeds funding the construction or acquisition of just over 1,400 new homes, according to the Office for National Statistics (ONS).
Despite raising £336.6 million from these sales, the average return is about £77,000 per property. Additionally, councils typically must return a significant portion of these funds to the government, limiting their capacity to reinvest in housing. Approximately 200,000 individuals are still waiting for social housing in this region.
While some housing associations have made strides in building new homes, the persistent concern is that the resources obtained from RTB sales are grossly insufficient to provide replacements for the lost properties. Rayner, who famously availed herself of the RTB in Stockport, appears receptive to criticism surrounding the scheme. Recently, she indicated that there may be restrictions on future council developments, preventing new tenants from purchasing their homes.
This potential approach may find favor among Labour representatives in areas with pressing social housing needs, where availability remains critically low.
Steve Rotheram, the Labour metro-mayor of Liverpool, is advocating for the government to encourage the construction of social housing. Similarly, Manchester’s Andy Burnham called for a pause on RTB for new builds after witnessing the loss of 500 social homes to the scheme last year. He likened this situation to “filling a bath without the plug.” Meanwhile, in Merseyside, nearly all former council housing has been transferred to housing associations over the past two decades.
Rotheram pointed out that registered social landlords (RSLs) have faced challenges inherited from the RTB. He reported that one RSL in Merseyside had lost nearly a third of its homes due to tenant purchases in the decade following the stock transfer. Tenants of RSLs can still acquire their properties through “preserved” RTB if they lived there when the council owned them, and can apply for the Right To Acquire after three years of lease.
Rotheram emphasized that lower borrowing rates for RSLs and a moratorium on sales could significantly advance social housing development, stating, “You are not going to build a lot of houses for someone to come along in three or four years and buy it below market value.” He indicated that discussions are ongoing with Rayner to draft proposals that will aid growth in social housing.
Mark Smith, Blackpool Council’s cabinet member for economy and housing, acknowledged that while the RTB generates some funding for housing projects, the revenues fall short in replacing lost social rent housing. He also pointed out the challenges posed by existing regulations that hinder collaborative funding approaches among different sources for constructing council housing.
New Policies
Under the Labour government’s new housing policies, councils and housing associations will have increased autonomy regarding the utilization of RTB funds. Previously, councils could allocate only 50% of the proceeds from RTB sales towards their new housing efforts. In the new framework, they will have the opportunity to use all RTB funds and to integrate contributions from private developers stemming from planning agreements.
Section 106 agreements require developers to provide financial contributions to councils aimed at offsetting potential adverse impacts of their developments on local communities or housing markets. Observers within the social housing sector have noted that the RTB policy has historically failed to maintain a one-to-one replacement ratio for lost housing units. They express concern that this ongoing reduction in social housing stock fuels waiting lists and forces many into inadequate living situations.
‘Serious Shortage’
According to the Local Government Association (LGA), which represents councils, the country faces a “serious housing shortage,” with unprecedented numbers of individuals residing in temporary housing. LGA housing spokesperson Adam Hug asserted, “While the Right To Buy can and has delivered home ownership for many, the scheme in its current form does not work.” He highlighted that increasing discounts and other limitations on the use of RTB proceeds prevent councils from adequately addressing replacement costs.
Hug called for the removal of obstructive policies that disincentivize local authorities from developing social homes and urged for councils to be endowed with the authority to retain the entirety of RTB proceeds for their use.
‘Scandal’
In a notable shift, the Conservative-led government raised the potential discount available to tenants under RTB in 2012. The Labour administration intends to reduce these discounts to between £16,000 and £38,000, contingent on location—far less than the maximum £136,000 provided in London and over £100,000 elsewhere.
Rayner, who benefited from a similar discount when she purchased her council house in Stockport in 2007, expressed her desire for a “fairer” RTB system. Her department characterized the current situation as a “scandal,” noting that since 2012, only about one-third of the homes lost to RTB have been replaced. The government is reportedly working quickly to address the decline in social rented housing.
Despite reaffirming that there are “no plans to abolish the RTB,” it is apparent that the social landscape established nearly 45 years ago is likely to undergo significant transformation, preserving the name but altering its implementation and impact.
Source
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