Living in the past: should Right To Buy be extended to housing association tenants?

Living in the past: should Right To Buy be extended to housing association tenants?

It’s hard to get onto the property ladder these days. If you’re one of the country’s lowest earners, or even a young middle-earner, stepping onto the first rung can feel like climbing Kilimanjaro without a rope, pulley or harness. Consequently, Prime Minister Boris Johnson’s reported desire to extend Right To Buy to housing association tenants has piqued our interest. Could this help ‘generation rent’ to finally level up? 

Helping people to own their homes is very much a part of Boris’s blueprint. After all, property ownership is a traditional Anglo-Saxon aspiration. And, whisper it quietly, people are more likely to vote conservative if they own their own home. However, is bringing back a policy that proved positive for Margaret Thatcher 40 years ago really the way to push people out of property purgatory today? We pull the pork below…

What’s the plan? 

Extending Right To Buy would give millions of people currently living in housing association properties the opportunity to buy their home for a major discount - up to 60 or 70% of market value has been mooted. This mirrors Maggie’s 1980s initiative, which gave tenants the opportunity to buy their council homes.

Because Thatcher’s plan proved incredibly popular, with both the people who bagged a bargain and the Tory backbenchers, conservative leaders have tried to repackage the policy many times: it was part of Michael Howard’s and David Cameron’s manifestos in 2005 and 2017 respectively.

It’s no surprise, therefore, that Boris’s brigade seem to be reviving the idea - perhaps alongside other measures such as using the billions paid out in housing benefit to help recipients secure mortgages. There are also rumours that Boris could ask banks to take housing benefit into account when assessing applications instead. 

Why it might work

The policy sounds attractive because, not to put too fine a point on it, the potential discounts would be spectacular. Whereas today’s Right To Buy applicants can only secure a maximum discount of £16,000 (which is why the number of people doing it is barely 10,000 each year), Boris would remove this cap and offer enormous savings on both housing association houses and flats. 

In theory, therefore, owning a home would suddenly become more affordable for as many as 2.5 million people. It would particularly benefit those living in the South East and London, where prices are highest. It could also be argued that increasing the number of owner-occupied homes would help the environment. After all, those who own their home have more incentive to improve its energy efficiency.

Why it won’t work

Although offering people a cable car ride to the top of Kilimanjaro sounds great in theory, the reality isn’t so simple. For example, many critics claim that home ownership is now so expensive that even mind-boggling discounts won’t be enough to entice those on low incomes. We shouldn’t forget that there’s currently a cost of living crisis, too. Given the choice between (a) heating their home or (b) actually buying their home, most responsible folk will probably opt for the former.

Another problem is the small matter of how much the initiative would cost the public coffers, which some experts think could be as much as £14 billion over ten years. That’s a lot of lolly that could be spent on subsidising energy bills. Is this really the time to be dangling the aspirational carrot of home ownership? 

The main drawback, however, is that every single property bought would diminish the nation’s stock of social housing. David Cameron claimed that every home sold would be replaced by a newly built one. However, building new homes has frequently proved more difficult than anticipated, which is one reason why there’s currently a chronic shortage of stock on the market. 

Polly Neale, the chief executive of housing charity Shelter, has been particularly vocal on this aspect. Pointing out that nearly 34,000 people became homeless in the last quarter of 2021, and that only 5% of social housing stock has ever been replaced once sold, she argues that “there could not be a worse time to sell off what remains of our last truly affordable social homes”. 

The other problem, of course, is that generation rent (in the main) doesn’t actually live in social housing; most tenants now live in the private rented sector. Therefore, Boris’s brainchild will do little for them. What’s more, research has shown that two out of five homes bought under Right To Buy ultimately ended up being privately rented anyway. Oh dear.   

What do we think?

Attempts to get more people onto the property ladder are usually easy to support, especially as other reforms such as the proposed changes to planning rules stalled last year. However, as social housing waiting lists in England current stand at over a million, it doesn’t make sense to reduce the nation’s reserves of available homes at this time. 

Although extending Right To Buy would undoubtedly help some people, what worked 40 years ago isn’t necessarily the best policy now. In fact, both Scotland and Wales have actually abandoned Right To Buy completely in the last few years. Consequently, one wonders whether this will have much impact on the housing crisis in general.

In the words of former Propertymark head and Just Move In ambassador, Mark Hayward, “the effects of the Thatcher wholesale sell-off are still being felt to this day in terms of the lack of suitable homes, so extending Right To Buy seems ill-advised”. We wonder, therefore, whether it might be better for the government to build more social housing and think of fresh ideas. After all, looking to the past for policy ideas could lead to accusations of living in the past. 

Share: Print:
Previous Article Next Article Back to the blog