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Sunday, December 06, 2009

The Right to Buy thirty years on

In 14 days time we will be commemorating the thirtieth anniversary of the publication of a Parliamentary Bill that was to become the Housing Act 1980, a piece of legislation that ushered in a social revolution. It was the start of the Right to Buy, which built on previous legislation in 1957 and has since enabled 2 million tenants to buy their own home.

Today's Observer has a piece looking at the impact of this policy, that along with the Falklands War and the splitting off of the SDP from Labour, helped to re-elect Margaret Thatcher in 1983. I well recall a phone-in programme on Swansea Sound during that election in which a local Conservative candidate was being slaughtered by ordinary listeners disgusted at the impact of Thatcherism on the South Wales economy.

At some point an enraged voter rang in to demand to know what the Tories had ever done for the working classes. The answer that they had allowed them to buy their own homes completely deflated the caller's anger and the rest of the programme was completed in relative calm, the Tory candidate having silenced most of his critics for the time being.

Even today, the aspiration to own one's home is an important social and economic factor and that is why abolishing the right to buy altogether is not an option in my view. However, the article does point to some important shortcomings with the policy that need to be addressed, in particular the diminution in the supply of social housing and the failure to replace it:

But today, said Caroline Davey, Shelter's deputy director of policy and campaigns, millions of homes have been taken out of the social sector without being replaced and two million households languish on waiting lists, more than one million children live in overcrowded housing and tens of thousands are trapped in temporary accommodation. "Every day Shelter sees the devastating effect the shortage of affordable housing has on people, and how their lives could be vastly improved by a decent, secure home."

The number of people across Britain on waiting lists for a council house is up almost 10% in the last year. The paper says that some inner-city areas will need decades to clear their backlog and that with house building all but stopped in a recession that has seen repossessions and unemployment rise, there is a crisis in Britain's homes. Some point the finger of blame at the Right to Buy.

It seems to me that the biggest failing with the Right to Buy was that resources were not made available to replace the stock that was sold off. Peter King of De Montfort University, is right when he says that "the housing wasn't lost, it stayed put. Any right to buy property sold wasn't empty and available, it was already lived in."

But over the last 30 years the capacity of the remaining social rented housing stock to cope with demand has been undermined by the policy, whilst the sell-offs themselves fuelled housing inflation thus preventing many from getting onto the housing ladder and leaving them dependent on renting.

It is also the case that it was the desirable properties that were bought first. In rural areas that was particularly serious as it devastated the stock of available rented social housing, pushed up house prices and left families with no option but to move out of their village or town if they were to find suitable homes. As a result local authorities faced huge issues in letting what was left and in particular keeping it up to standard with a massively reduced income.

The ring-fencing of housing revenue budgets meant that Councils could only use rent income to fund the repair and modernisation of their properties yet this income was being massively eaten into as their housing stock reduced due to sales. Money in the rates fund was no longer available to maintain Council housing stock.

Proceeds from the right to buy were directed by the government to paying off debt and were not available to build new homes whilst changes to the housing benefit system meant that resources were diminished further as Government top-sliced millions of pounds for their own coffers.

The inability to fund modernisation as a result of these policies has helped to create the circumstance now whereby across Wales there is a £3 billion backlog in the money available to bring Council homes up to the Welsh Housing Quality Standard and the only option open to most local authorities is a debt-free stock transfer to a not-for-profit housing association, not subject to the same financial restraints. England and Scotland have the same issues on a bigger scale.

How we tackle the problems caused by the Right to Buy now is a moot point. The key must be to replenish the stock of affordable housing, particularly that available to rent. That is why the current policy of the Welsh Government to seek the power to suspend sales in areas of high demand is the right one. It does not take away people's rights just suspends them for good social reasons so as to ensure that their desire to buy their own home does not prevent others from being rehoused.

In fact we may not even have to go that far. I personally favour restricting the right to buy on new build social housing for extensive periods of time so that the Government can get a reasonable return on its investment. New tenants would take the properties on that basis so we would not be taking away from them a right they already have.

In the Observer article Graeme Brown, director of Shelter Scotland says: "The haemorrhaging of affordable housing stock without building new stock was like filling the bath with the plug pulled out." He is right. If we are to replenish the rented social housing stock in areas of high demand then we need to create some stability in the sector. In other words we need to put the plug back into the bath whilst we refill it.
Hi Peter

Found your blog while googling "council housing"

You said: "It seems to me that the biggest failing with the Right to Buy was that resources were not made available to replace the stock that was sold off."

I totally agree! Local authorities need to be allowed more funding to build new council homes. Do you agree?

Housing associations have their place in the social housing sector but are patently not able to supply the homes so many people need.

I hope the WAG's review, of how council housing income is managed through the housing revenue account and housing revenue account subsidy regime, results in more funding for local authority housing. Pumping more money to housing associations is not the answer.

Paul Lynch
Hi Paul, I am surprised that you have not found my blog before.

I agree that more money needs to go into social housing but that is easier said than done. The fact is that there is not a great deal of money out there.

It would be nice if we were able to start building Council houses again and maybe a limited programme could be started but the key problem facing the vast majority of Councils is the quality of their existing stock and if they do not secure stock transfer then I cannot see them spending money on anything other than improvements for the foreseeable future.

I agree that there is potential in the review of the housing revenue account to make some significant changes but without extra money that will not make too great a change to our present situation.

Essentially we have to work smarter and that is why housing associations have a big role to play. They are part of the public sector but are not restricted like councils in what they can do. It is inevitable that most WAG funding will be directed through them.
Might I suggest you and your colleagues at the Assembly look for solutions that enable housing associations to satisfy the needs, I recommend the following link as a possible starting point ...


... government, whether Assembly or Local Authority, generally do not make good bedfellows with business, what your government could do is clear paths or create frameworks for the businesses to deliver. You might find that the people at the top of Jephson (and other nationwide housing associations) could help you help the people in Wales. Jephson have a variety of schemes for people in need of homes as examples and I am sure will be able to highlight areas that the WAG could be involved to make things happen.

Taking away rights from a section of the public even for a limited time, is in my opinion unjust.
Peter, it's a shame you say you believe most WAG funding will be directed through housing associations.

I say shame because isn't it obvious that if housing associations were the answer to our social housing shortage we wouldn't be in this mess in the first place? After all, if housing associations were unable to provide the home people needed when the sun was shinning (metaphorically) how are they expected to do it now it's pouring with rain? As you say, there is not a great deal of money out there (unless your a banker, apparently!).

Isn't it also obvious that the only real solution is to allow a 'level playing field', in terms of debt write-off and extra subsidy for local authorities as is on offer to housing associations? That way there would be enough funding to improve existing housing stock and build new.

Besides, if tenants, and perspective tenants, wanted to live in housing association properties why are so many voting 'No' to stock transfer proposals, and why are there so many people on council house waiting lists?

It seems to me the only people who want housing associations to take the place of local authority housing are housing associations bosses on fat-cat salaries who want to spread their empires further and further, and those who believe in a neo-liberal free market economy where privatisation is seen as the panacea for governing our economy. Yet, ironically, look where that type of thinking has got us today..!

It's sad, the very same mentality that got us into this mess now wants to try getting us out of it by applying more of the same.

Maybe the voting public should demand a we need a ballot for a new Political Thinking Quality Standard, because many of our politicians need to be vastly improved. It would be one ballot I'd vote 'Yes' in.

Paul Lynch

P.S. I found your blog site a long time ago, it was your particular blog entry I stumbled upon today.
Very interesting article but a huge part of the population alive today did not have the vote or were not even alive when this Act was passed.

Any chance of bringing your analysis up to date or making it relevant to the rest of the public? There is not a word here about the current demographics of the UK, household size or the huge growth in population in the last couple of years in some of our most stressed cities.

Could you address those issues and then have a sensible thought or two about the world as it is, not about how it might have been if something long gone hadn't happened?
Technomist,perhaps you should read the rest of the blogpost after the first few paragraphs. The point is that I have addressed the present situation as it is influenced by this Act passed, as you say, before many people were born.

Paul, none of what you say is obvious because when the sun was shining we were in a completely diffeent situation housing-wise. The point is that the Treasury have shown no signs of changing policy and are unlikely to do so. There is a complex housing subsidy regime that depends on this system and that actually benefits many tenants. Unpicking that system is not easy.

I suspect that the dowry of paying off debt is a time limited incentive. There simply is not enough money to do it for every local council in the UK.

Prospective tenants do not distinguish between Council and Housing Association properties. Many are on both lists. Many of those on council lists are actually housed in housing association properties because councils have nomination rights. What they want is a decent home with modern facilities and RSLs offer that more than Councils do.

If Councils can sustain high quality housing then they should keep their homes, but we should not deny tenants a decent modern house for the sake of misguided ideology.
The right to buy has given people profits , I know a handful of people who have kept there homes the rest have sold, by me houses stay on the market empty for years, because once somebody sell it for the market price and that means it's no longer a cheaper home to buy.

Sorry houses to rent should be to rent not buying, build cheap houses to buy and see what happens to the mortgage market
Peter, I totally disagree with your last comments. Many people prefer local authority housing over housing associations because as council tenants we value our secure tenancies, lower rents and a more accountable landlord. And that's why so many tenants vote 'No' to stock transfer.

Housing associations have failed to provide the home people needed. Waiting lists for social housing were incredibly high before the recession hit. Unpicking the HRA subsidy regime system may not be easy but, as my dear old Gran used to say, it takes a man, not his underpants!

The Treasury has shown clear signs of changing policy. The case for council housing is at last being heard. As you must be aware, the Westminster government has published proposals to reform council housing finance and address the funding injustices.

Ministers promised the Review of Council Housing Finance will "ensure that we have a sustainable, long term system for financing council housing", and, as a result of the review, the government has now produced concrete proposals - the consultation document explicitly promises "a level playing field between transfer and retention".

For decades council tenants have paid more to Government than is spent on the upkeep of council homes. Ministers claim much of the rent robbery is used to pay for ‘historic debt’, yet there is no justification for tenants being forced to finance all historic housing debt.

Government is willing to write off outstanding debt on stock transfer. New research shows past robbery by Government from rents and right-to-buy sales is £68 billion – more than enough to pay off the debt and meet the investment backlog. Government writing off Councils’ HRA debt and ending all rent robbery would free up £1.7 billion a year towards fully-funding allowances.

The ‘Fourth Option’ of direct investment to bring council housing up to decent standards is as much a necessity as ever, as is the need to build new council housing.

Government has been prepared to dig deep to subsidise privatisation. They must now give equal funding to local authorities to create the ‘level playing field’ long demanded. If government is prepared to pour billions into funding privatisation through stock transfer then there is no financial reason why they cannot redirect those resources into council housing.

With Jocelyn Davies's recent announcement of the housing revenue account and housing revenue account subsidy regime review, the departure of finance minister, Andrew Davies, and the entry of Carwyn Jones, as leader of the Labour Group in the Assembly, hopefully we will see a similar change of direction here in Wales...!

Financing housing associations is only an effective attempt at trying to ease the social housing shortage, and does nothing to improve the condition of council housing stock.

However, financing local authorities to improve existing housing stock, and build new, is an efficient solution to the social housing shortage, and would allow council housing stock to meet the much vaunted Welsh Housing Quality Standard.

It would also get a let of local tradesmen back into work and create apprenticeship opportunities for many non-academic school leavers. The subsequent knock-on effects would benefit the whole socio-economic conditions of Wales.

(Hope your listening, Carwyn...!)

Paul Lynch
Paul, I am not aware of any research that finds a preference for Council above Housing Association tenancies and personally I am happy to support both. However, it is a fact that many people on Council waiting lists opt for a housing association property. It is also a fact that a tenant of a housing association is as secure as one in a Council house, that rents of both are effectively capped by the Welsh Government, that housing associations are more heavily regulated than Councils and that whereas Council tenants only get to vote once every four years for their Councillor, they are directly represented on housing association boards and thus better empowered.

Waiting lists for social housing have always been high but are higher now. That is not a failure of housing associations though it is a failure of government.

The point on the HRA subsidy regime is that tenants will lose out as well as gain so it is not a matter of reform being too complicated but of it being done sensitively. Nevertheless, even the change in policy promised by the Treasury will not secure the equality of treatment you desire.

You can only have a level playing field between transfer and retention if you have big sums of money available to offer Councils. There are no signs of that emerging and given the scale of the cuts being proposed by even Labour I cannot see it happening in the future either. My guess is that they will secure parity by abolishing debt write-off on transfer. If that happens everybody will lose because improvements to properties will not happen.

Your fourth option is illusory and in my view it is a dishonest alternative. It did not emerge after Swansea or Wrexham voted 'no' and it will not emerge if Neath Port Talbot vote 'no'. The only way that your jobs dividend will happen is if there is stock transfer. That is what has happened in Bridgend and elsewhere and it can happen again.

The point is why should we spend scarce public money on improving the Council housing stock when there are other options of financing this and the logical way to spend that money is to build new social housing, both Council and Housing Associations. There is only so much money and you cannot spend it twice.

Your chances of getting additional money out of the Welsh Government is even slimmer. They do not have it. They are already under-resourced for what is needed. They do not have £3 billion to put into housing, which is one fifth of their budget.

Your vision sounds nice but I suspect that the Government promises you are relying on to deliver it will not even go a fraction of the way towards your goal.
Peter, repeating the claim that "a tenant of a housing association is as secure as one in a Council house", or indeed that rents for both are equal, does not make these claims true, hence these claims cannot, by any stretch of the imagination, be called "facts".

Jan Luba QC summarises the meaning of a secure tenancy: “Most tenants of local authorities enjoy security of tenure as secure tenants, protected by arguably the most generous charter of rights available in the residential sector. That security is lost on transfer. The tenants will at best be assured tenants of the purchaser. Likewise the Statutory obligation on a council to charge only a reasonable rent has no application to a purchaser.” (Large Scale Voluntary Transfer: not all honey and roses’, Jan Luba QC, (2000) 4 L.& T. Rev. 6).

You also claimed tenants "are directly represented on housing association boards and thus better empowered". Yet research for the Housing Corporation shows the role of tenant board members is “primarily symbolic, providing a fig leaf to cover the unpalatable fact that the real power lies elsewhere.”

The 'Forth Option' is not just my idea, as you suggest, it is supported by the House of Commons Council Housing Group, all the major trade unions, a great many MPs, councillors and millions of tenants throughout the UK.

IF the governments motivation to ballot tenants on transfering housing stock to a housing association really is for alteristic reasons (and not a cunning plan to hoodwink council tenants to accept the privatisation of their homes) then, logically, that motivation cannot suddenly disappear if tenants reject stock transfer. Thus, the government (if they are being sincere) would still intend to improve housing stock, regardless which way tenants vote.

Ironically, therefore, the more 'No' votes that occur the more chance there is of government investing in council housing, and the more chances tenants have of having their homes improved without risking losing their security of tenure, lower rents and an accountable landlord.

If, however, the governments motivation to ballot tenants on transfering housing stock to a housing association is a cunning plan to hoodwink council tenants to accept the privatisation of their homes, then tenants are completely justified in rejecting stock transfer proposals.

All thats needed to improve council housing stock is a change of policy from the Treasury to allow local authorities the same level of debt write-off and funding as is on offer the housing associations - no more, no less! It's not rocket science.

Paul Lynch
Paul, it is in fact the case that the differences between a secure and an assured tenancy are so small as to be insignificant. It is a fact that a tenant is as secure with a housing association as they are with the Council, especially with legally binding contracts to back it up. Once the Assembly brings in a single tenure that will be doubly so.

The statutory obligation to charge a reasonable rent on Councils is open to interpretation which is why Council rents vary so much from area to area, and even within local Council areas. Housing Associations though are regulated and the Government determines what their maximum rent levels are so tenants are protected, possibly more so.

The Housing Corporation does not have any jurisdiction in Wales where community mutuals are in operation in some cases and where tenants are in fact full board members with voting rights. There is nothing symbolic about that.

The fourth option may be widely taken up but it is still a myth. Simply put, without extra money for the public sector there is no parity, and there is no money forthcoming. Most of the MPs I have spoken to in favour of the fourth option, including in my own party, do not understand how housing finance works.

You are touchingly naive on what should happen after a no vote. Stock Transfer is not privatisation because housing associations do not sit in the private sector. The government offer debt write off because that is cheaper than funding the entire modernisation programme but also once transfer has taken place they have more control over the housing stock through regulation, underlining my point about it not being privatisation.

If they start giving the money directly to Councils instead then they would incur costs of billions of pounds that they cannot afford. That is why a 'no' vote means no extra investment and no extra government cash. To tell tenants otherwise is disingenuous.

It is nice to see that 'all that is needed is a change of policy from the Treasury to allow local authorities the same level of debt write-off and funding as is on offer the housing associations - no more, no less!' but that is not going to happen because they cannot afford it. To tell tenants that it may happen is misleading them.
If you live in a council house and the council then moves you to a Housing association you keep the council housing charter, for example although I now live in a housing association property I sign to my councils charter.

I did not want to move but was forced to because the council did not have a property for wheelchair users, so I still keep my agreement.

But my housing association rent is now £15 a week more then a council house. which is not fair, they did it by making us pay for cutting the grass even when we don't have any.
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