Tuesday, 14 April 2015

Extending right-to-buy won't solve our housing problems but it is still a great idea


Let's be clear about one thing at the outset, right-to-buy doesn't mean there are more houses and certainly doesn't mean there are fewer houses. All it does is transfer ownership to current tenants from government and wealthy subsidised owners. A right-to-buy policy isn't about resolving housing problems (such as London's undersupply) but is about sharing the nation's wealth more equitably. And if you see it in these terms, it is a policy that people will welcome - or would do if they didn't either have a direct financial interest (local councils and housing associations) or else an ideological objection to poor people owning property (socialists).

There's a devil in the detail of any right-to-buy (RTB) policy and no-one has seen those details in respect of Conservative proposals to extend RTB to housing associations. When the property involved is state-owned the issue of discount could be lost in the endless (and byzantine) debate around local government finance but this extension of the policy means that RTB applies to properties that are not directly-owned by the state. Leaving aside the issue of eminent domain (as the Yanks call it), any policy has to compensate the housing association for the loss of its asset and/or rental stream. The way to achieve this is to ensure that there is a pipeline of new property to replace transferred homes. Indeed it was the lack of this pipeline that provided the principle criticism of the 1980s RTB programme.

While we're on about 'taking other folks property' bear in mind that Shelter (in cahoots with the development industry and planners) is very keen on compulsory purchase when it suits them:

A royal commission should decide in an impartial way where new garden cities should be located, and new development bodies should have the power to compulsorily purchase any necessary land, their report recommended. This would help to stop landowners from making excessive profits and instead could share the proceeds with the local community once land is sold on to developers, garnering support for new housebuilding, they said.

There is - other than that this is big business calling for subsidy and discount - no difference between such a development approach and the concept of RTB. Yet selling homes at a discount to ordinary folk is a terrible awful policy that will do dreadful things to the housing market while purchasing loads of private land at below its market value is a thought through policy from experts. And of course those new towns and garden cities will be filled with properties rented to the less well-off by worthy corporations - managed naturally by men and women who live in lovely privately-owned barn conversions nowhere near those rows of little boxes they're renting.

Today there are a lot of housing association directors taking to the airwaves and tweeting madly about RTB. None of them point out that their concern isn't for the tenant but rather for their associations' balance sheets. Just as a lot of the objection (not all to be fair) to the so-call 'bedroom tax' was really about housing association cash flow.

Instead of defending the current status quo, we should be looking at how to secure the transfer of ownership to tenants with the financial capacity while maintaining our provision of good housing for people who otherwise wouldn't be able to afford such housing. I really don't see RTB as a barrier to such provision.


Indeed it seems some housing associations were keen on RTB only a year or two ago:

Mark Henderson, Home Group chief executive, said: “When the Government published its Housing Strategy at the end of 2011, improved right-to-buy opportunities for council tenants were at its heart. Home Group highlighted then that a far more seismic economic impact would be felt if the same opportunity was extended to housing association tenants providing we can replace a new property for each one sold.

“Updating the right-to-buy rules for housing association tenants not only offers individuals the same chance to become a homeowner as residents in council homes, it will give a phenomenal boost to the UK economy.”


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