Think tank welcomes Right to Buy revival but urges government to go further

Boris Johnson 
Boris Johnson

Boris Johnson is expected to confirm plans to extend the Right to Buy to housing association tenants later today.

The prime minister will use a major speech in Lancashire to announce new measures to potentially help millions onto the property ladder.

It is reported that renters will be offered the opportunity to acquire their social properties at discounts of up to 70%, although is expected to be limited to a series of pilots for now.

There are concerns among some analysts that the Right to Buy extension could erode supply of affordable homes. But the policy has been welcomed by the Centre for Policy Studies.

A new Centre for Policy Studies paper, published today, describes Right to Buy as one of the biggest policy successes of the 20th century. It highlights the fact that almost 10% of households, representing roughly 4.5 million people, used it to move into ownership. It also sets out the scale of the discrimination within the benefits system against low-income owners as opposed to working renters.

The paper, by former Number 10 housing advisor Alex Morton, argues that Right to Buy led to a reduction in waiting lists for social housing. It also argues that the policy delivers long-term savings for the Treasury of around £140,000 per house sold, largely due to the reduced cost of housing benefit when someone becomes an owner.

It also claims that the benefit system is fundamentally biased towards keeping people as tenants rather than owners, with CPS calculations finding that just 2.3p is spent on incentivising ownership among low and middle earners for every pound that subsidises renting. It calls for this imbalance to be redressed by making the benefit system as tenure neutral as possible.

While the Centre for Policy Studies welcomes the government’s commitment to extending home ownership, it argues that it should go further than just extending the existing Right to Buy by revamping it in the form of a new Right to Own.

Under the proposal, tenants would obtain a mortgage worth 60% of the value of their home – which would be paid off in payments that rise at the same rates as social rents do each year. Like any other buyer, once this ends the property is owned outright however, effectively at a 40% discount, mirroring the Right to Buy discount but at a lower rate. In an emergency such as a loss of employment, the tenant would be able to access the equity they had built up, providing a cushion for them.

In other words, the Centre for Policy Studies believes today’s proposal would provide tenants greater security, with every rental payment increasing the tenant’s share of ownership – but still leaving them better protected in the event of financial shocks or unexpected costs.

The paper shows how the revenue from these sales, plus the sale of high-value council homes as they become vacant, could be used to fund the construction of a new wave of affordable social housing – expanding home ownership and the housing stock at the same time.

Morton, head of Policy at the Centre for Policy Studies, said: “The Right to Buy was one of the most transformative policies of the 20th century, moving millions of people into home ownership. Many of the arguments made against the policy since do not stack up. The Government would be right to extend the policy to housing associations to take the opportunity to place greater ownership at the heart of its levelling up agenda, and deliver on the commitments made in the 2015 and 2019 Conservative manifestos.

“Longer term, the government can not only revive the Right to Buy but fully reinvent it for the 21st century by implementing a Right to Own. This would put rocket boosters under home ownership rates whilst protecting tenants and the state coffers.”

Robert Colvile, director of the Centre for Policy Studies, added: “The government’s commitment to home ownership, and to the Right to Buy, is hugely welcome. Our report argues that restoring the Right to Buy to housing association tenants, as widely reported, will be hugely welcome – and demolishes many of the left-wing myths surrounding the Right to Buy.

“However, we also urge the government to go further in boosting ownership among tenants of all tenures, for example by turning the existing Right to Buy into a new Right to Own, and incentivising private sector landlords to sell to their tenants, as proposed in previous CPS work.”

 

Homesearch EOS
x

Email the story to a friend



8 Comments

  1. Robert_May

    Good grief!

     

     

    Report
  2. DefinitelyNotMW

    To quote Jo Maugham on Twitter yesterday, regarding dark money funded organisations: “It’s self-interest masquerading as public policy.”

    Report
  3. RosBeck73

    This is a very unfair policy – as why should those lucky enough to have accessed social housing get a huge discount paid for by other taxpayers/workers who may never be able to buy?  As regards to Robert Colville’s last point about the PRS, I demolished this particular policy in an article I wrote about it when it was proposed – it effectively amounts to an attempt as social cleansing, kicking out poorer tenants so that better-off people can buy their homes.. For this, I got cancelled by the  CPS’ online journal, which had previously published my articles. Some of the arguments in my article can also be applied to this policy.

    Rosalind Beck: Punishing private landlords is a flawed method to bring about “generation buy” – Conservative Home

     

    Report
  4. Jonathan Rolande

    The devil is in the detail. Every ‘solution’ seems to create a new problem…

    Report
  5. David Robinson

    This “Think Tank” needs to re-think.

    Report
  6. northernlandlord

    Local Councils are part of the Government. If the Government decrees that Councils have to sell their houses off cheap and swallow the loss, the Council must obey. Housing associations are Private companies or some sort of charity. Surely the Government can’t just tell private organisations to do the same? What about compensation?
    Even if the housing associations are compensated it is morally wrong to sell off Social Housing. Social housing is there to house those that can’t afford to buy or pay PRS market rent i.e. the poorest in society. The Government have decided that the UK will be a low wage unskilled zero hours economy run for the benefit of big business in which many employed workers rely on benefits to make ends meet. The way things are going with inflation, fuel and energy prices and a possible recession around the corner the ranks of the poor are really going to swell. As a result we will need more social housing not less.
    No doubt some Daily Mail reader types will see this as some sort of “scrounger’s Charter”. i.e .there is no incentive to work harder earn more and buy your own place as you will essentially get given a house. There might be a tiny grain of truth in this but it is certainly unfair on those not in social housing who have to fully fund themselves.
     What next? Will the Government attempt to do the same thing in the PRS? To be fair the way things are going for the PRS I think that many “mum and dad” smaller landlords who make up a large sector of the PRS landlords would be quite happy to sell their properties off to the Government at a bit below market price (or market price less any CGT that they would have to pay anyway) so that the Government can sell on to the existing tenants at a discount. That way the number or owner occupiers could be boosted without the loss of social housing.
     This would pave the way for the  PRS to be taken over by large scale “professional” corporate landlords which I believe given the unfair treatment meted out to the PRS must be the Government’s aim. Big business know that investment in retail and office space is not looking good as people cut back on expenditure. However there is one expenditure that people cannot avoid, that of putting a roof over their heads. Hence big business is now investing in this sector with massive Build to Rent developments. These people will be ruthless in their treatment of tenants unlike the “mum and dad” small landlords they will not compromise, they will have slick corporate lawyers lined up to take on any tenants who are antisocial or in arrears or who dare to complain.

    Report
    1. Jonathan Rolande

      When the council houses were sold off at least there was a gain financially – even at the discounted price, money went back to the state. This idea seems to do the opposite, the state will have to give money to the private organisations to make good their loss. And sorry, but why are HA tenants more entitled to help than a PRS tenant, whose taxes look set to prop up their HA neighbour’s purchase?!

      Report
      1. AcornsRNuts

        Perhaps this is a dry run.  If it works without too much protest from the HAs, the next move would be with the PRS.  What will Shelter do when all small landlords have quit?  The big boys like John Lewis will react differently.

        HAs own their properties with no connection the councils or government.  This is compulsory purchase without full compensation.

        Report
X

You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.