Briefing: Tory ‘Right to Buy’ Announcement

James

Conservative ‘Right to Buy’

Most people aspire to own their own home, and we believe in supporting people on the journey to home ownership. But policies that promote home ownership should not discriminate on the basis of previous housing tenure.

It is unfair for private tenants to get little or no support to buy a home while some social tenants are entitled to buy their home with a discount of as much as £100,000.

That’s why we will continue to support policies that help people to buy their own home – such as our proposals for Rent to Own homes that will help working people buy their first home for the same cost as renting.

Under our new ‘Rent to Own’ model each month’s rental payment steadily buys you a share in the home, which you’ll own outright after 30 years, just like with a normal mortgage.

Policy

• The policy will extend the right to buy to housing association properties, which the Tories claim will allow an estimated 1.3m families the right to buy their home.
• The proposal will allow people living in a housing association owned house to buy at a discount of 35% after occupying it for 3 years, with the value of the discount increasing by 1% every subsequent year.
• For flats the discount will be 50% after living there for three years, increasing 2% in each subsequent year.
• The total value of the discount will be capped at £102,700 for London and £77,000 elsewhere.
• Guardian reports that Conservatives say that the policy will be paid for by forcing councils to sell off their most valuable 210,000 council properties.  The Guardian says that “The Government expects 15,000 of these high-value council properties will fall vacant each year”, raising an estimated £4.5 billion.
• This will push people on low to middle incomes out of an area’s wealthiest areas and into its poorest – leading to social ghettoisation.
• This £4.5 billion will also be used, according to the Guardian front page and elsewhere, to build new affordable housing and to fund a £1bn brownfield regeneration fund that will produce 400,000 new houses over five years.

Impact on housing stock

• Tory plans would mean selling off a town the size of Swindon (186,000 local authority houses out of 1.7m homes)
• Despite nearly 1.4m people remaining on Local Authority Waiting Lists.

Cost

• The National Housing Federation has estimated that extending ‘Right to Buy’ to housing associations would initially cost £5.8 billion, but in time could cost tens of billions more as more people become eligible. (source: National Housing Federation Press release)
• They suggest this is enough to build could finance 300,000 shared ownerships homes.
• They also quote Labour London Assembly Member Tom Copley on his figures that 36% of properties sold under Right to Buy in London may now be in the hands of private landlords. (tomcopley.com)

Policy Exchange original plans

• The policy is based on a Policy Exchange report from 2012.
• Cameron says councils will sell of 15,000 LA properties a year. This is roughly equivalent to the Policy Exchange report, who recommend selling 28,500 social housing properties a year, where 41% of them are LA-owned
• PolicyExchange say the selling of 28,500 houses will bring in £4.5bn a year– the same figure Cameron uses, but for selling only around half as many houses
• PolicyExchange recommend spending all the money on building additional affordable homes, compared to Cameron’s plan to also fund the discounted selling off of housing association homes

http://www.policyexchange.org.uk/images/publications/ending%20expensive%20social%20tenancies.pdf

Same old Tories….

• This is literally the same old Tories.  They proposed this in their 2005 Manifesto – the famous ‘Are you thinking what we’re thinking’ manifesto.
• On page 22 it reads:

“A Conservative Government will extend this right to tenants of housing associations. Our plans to boost shared ownership schemes, and give social housing tenants the right to own a share of their home, will also benefit first-time buyers.”

http://www.politicsresources.net/area/uk/ge05/man/manifesto-uk-2005.pdf

• If the best idea the Conservatives have got for Britain in 2015 is something rejected overwhelmingly in 2005 then what does that say about the Conservative Party?
• 2005 was Lynton Crosby’s campaign- it’s the same thing all over again.

Quotes

David Orr, Chief Exec, National Housing Federation

“As a Conservative minister recently said to me “getting a housing association tenancy in my constituency is like finding the golden ticket. The quality and price is so much better than anything in the private sector”…. [under the right to buy plan] all the private renters living in the minister’s constituency, and all the rest of us, would pay for some lucky tenants to be gifted homes that had been built and maintained for the benefit of the community.”

“If real new money is now to be found to fund RTB, that money could also be used to build new homes rather than changing who owns them.”

“Short term gimmicks designed to recreate the politics of the past are an expensive distraction.

http://www.housing.org.uk/media/blog/extending-right-to-buy-is-wrong/

Ruth Davison, Director of Policy and External Affairs at the National Housing Federation

“A very conservative estimate of this policy puts the cost to the tax payer of at least £5.8 billion.

“It won’t help the millions of people in private rented homes who are desperate to buy but have no hope of doing so, nor the three million adult children living with their parents because they can’t afford to rent or buy. To use their taxes to gift as much as £100,000 to someone already living in a good quality home is deeply unfair.”

Gavin Smart, CIH interim chief executive, said replacing ‘Right to Buy’ homes was “vital for people on low incomes”.

“Right to Buy has helped millions of people become homeowners, but there are many more who remain in housing need,” he said. “It is crucial that every home sold is replaced.”

Financial Times ‘Councils struggle to replace sold-off homes’ 4^th April 2015
James Drummond
http://www.libdems.org.uk/