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Sunday, June 28, 2015

Tory sell-off could fuel a housing crisis

At the last election the Conservatives made a manifesto pledge to offer 1.3 million English tenants of housing association houses and flats the chance to buy their homes at a discount. It is an innocuous looking promise but it could have huge consequences for the housing market, particularly in London and South East England.

The Observer reports that local authorities in inner London now believe that they will have to sell every new council home they build, as soon as they are ready, just so that they can finance this give-away. This is because the funding for discounts for housing association tenants wanting to buy their homes is due to come through forcing local authorities to sell their most expensive properties.

The paper quotes James Murray, executive member for housing and development at Islington council, who is spearheading the development of 20 new council houses for local residents:

The expected bounty from the sale of such high value homes is also supposed to finance the building of replacement properties to meet a desperate need for affordable accommodation.

“But the problem is that they haven’t thought it through,” says Murray. “We had a carefully crafted plan. These flats are designed for those aged over 55, and the idea is that those who want to downsize from family council properties can do so. It is on the edge of the estate, so people don’t need to move away from where they have lived. The bedroom tax doesn’t apply after you retire, but people moving in at 55 would also have got a few years of avoiding that if they moved in here out of their larger homes.

“But it looks like we will have to sell the flats when they are completed in September. Each of them would sell on the open market at £485,000. And because they are new they are within the third most expensive properties that we have. In fact, all new council homes in inner London will have to be sold off. And what incentive will we have to build again?”

Not only are homes being taken out of the affordable housing stock, reducing the opportunity for people to be rehoused in the future, but the chances of that stock being replenished is diminished as the receipt from sales will be insufficient to build more homes, even if land was available to build on. The requirement on councils to sell their highest value stock will also prevent them building new social housing.

The outcome will be even more spiralling rent increases in both the public and private sectors and rising property values, driven by housing shortages, and property speculation. The housing crisis already facing much of London and South East England could well escalate further as a result.

I don't agree with the way that the Welsh Government is approaching the right to buy here, as I am concerned that they are using a sledgehammer to crack a nut and taking away the rights of existing tenants*, but thank goodness we will not have to deal with the unevidenced ideological madness being promoted over the border by this new Tory Government.

*My view is that the best way to manage the right to buy in Wales is remove it on new build social housing. This preserves the rights of existing tenants whilst removing any disincentive for local councils to build new homes.
Welsh Labour is in no position to criticise selling council housing, seeing as how they persisted with the policy of large-scale "voluntary" transfer even after it had been abandoned in England.

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