4th October 2011
Now David Cameron hopes to repeat that trick. For while "right to buy" has never gone away, the discount on the open market value has made it less attractive. The most recent figures on right to buy, issued by the Communities and Local Government department last month, show sales have dropped sharply. During 2010/11 there were 8,410 sales across England, compared with 88,330 in 2003/04. The average discount in 2010/11 was 25 per cent, compared with 37 per cent in 2003/04 and 44 per cent a decade ago in 2001/02. Some discounts are as low as 10 per cent.
According to The Guardian Cameron intends to increase discounts to encourage council tenants to buy their own homes. But unlike Thatcher, he says each property bought under the scheme will be replaced with an affordable rental home on a one for one basis. He also unveiled a plan to release government brownfield land to developers with the builders only paying for the land once they had sold the housing.
All this, he claimed, would help re-invigorate the economy, creating jobs in the depressed building sector and demand for UK goods as few elements in homebuilding are sourced overseas. And the replacement element would also dispose of the biggest criticism of the Thatcher policy – the reduction in social housing which led partly to the buy-to-let boom.
But will the recycling of right to buy prove to be another roaring success or, as Karl Marx wrote, will it be a question of "History repeats itself, first as tragedy, second as farce?"
The National Housing Federation, which represents housing associations, has warned this could prove a significant setback for affordable house-building. The National Housing Federation chief executive David Orr said: "Previously Right to Buy was great for those lucky enough to be in the right place at the right time to take advantage of it, but disastrous for those who later needed rented home and found a desperate shortage of social homes. We cannot allow that to happen again."
According to Inside Housing, housing minister Grant Shapps has pledged that there will be no net loss of housing under the government's revamped right to buy scheme.
Inside Housing readers were less kind to the policy statement. Rick Campbell wrote "So, a home will be bought under RTB (right to buy) and Shapps will wave a magic wand and a replacement home just appears — absolute codswallop!"
Esmeralda questioned the size. "And will they be the same SIZE homes? Currently any large (4 bed plus) house gets bought under RTB because the large family occupying it has lots of hardworking children who can chip in – this then takes lots of large homes, which are acutely needed, out of the stock. Will they be replaced like-for like?"
And romin sutherland commented: "Whatever one thinks about the right-to-buy in principle, now is certainly not the right time to be pushing it forward again. Yes, Grant Shapps assures us that there will be no net losses to the housing stock but this fails to take account of the fact that affordable rent is not social rent, so does not replace like for like. Affordable rent will not only drastically reduce security of tenure, its higher rents will also act to either exclude the poor or increase the housing benefit bill."
But Conservative Wandsworth Council in London welcomed the move – but it wants to use the money raised to help non council tenants buy a home as well. Right to Buy sales in the borough fell from 274 in 2003 to just seven last year.
Wandsworth wants the ability to set the level of discount and the freedom to use receipts to create a 'deposit pool' to help others into home ownership. (see Conservative Home )
But all this ignores potential problems. The best council housing went years ago and little has since replaced it. Potential buyers will steer clear of flats – most lenders hate them (especially above the fourth floor) while a mix of private owners and social tenants in a block can land the former with ruinous bills if major works are needed.
The biggest difficulty, however, could be persuading lenders to offer loans. Since the right to buy's heyday, mortgages are tougher to get. Lenders look at the market value rather than the discounted price so a £100,000 home sold for £60,000 could effectively mean a 100% mortgage on a 60% maximum loan to value product so no deposit would be required. But this could lead to a resurgence in dodgy brokers offering loans on a door to door basis to those unable to service them over the long term. Another sub-prime disaster?
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