Councils demand end to RTB’s erosion of social housing

Councils are calling for the abolition of right-to-buy (RTB) in its current form after revealing the policy led to the loss of nearly 8,000 social homes last year.

In a new position paper published ahead of next month’s Budget, the Local Government Association (LGA) has warned that as it is currently designed and implemented, RTB “can no longer be allowed to exist”.

The policy has long-been a flagship element of the government’s drive to boost home ownership, offering tenants huge discounts to buy their social home. To its critics, however – as reiterated by the LGA – it has culminated in the net loss of “much-needed” social housing stock year on year, fuelling the chronic housing crisis.

The latest figures show that, for the last financial year, 10,896 homes were sold through RTB but only 3,447 have been replaced, resulting in a net loss of 7,449 social homes in 2022/23.

In its new paper, the LGA has set out what it says are key reforms to include in March’s Budget to ensure the RTB scheme “works for everyone”.

According to the LGA, whilst RTB “can and has” delivered home ownership for many, the system in its current format does not work for local authorities and those in need of social housing.

The LGA said main concern for councils is that rising discounts, alongside other measures that restrict councils use of receipts from RTB sales, mean that “one household’s home ownership is increasingly being prioritised over another’s access to secure, safe, social housing”.

Councillor Darren Rodwell, the LGA’s housing spokesperson, said: “We are facing a significant housing shortage in this country which has pushed council budgets to the brink as they struggle to find suitable homes for an ever-increasing number of people.

“Whilst the right to buy can and has delivered home ownership for many, the current form does not work for local authorities and those most in need of housing support are simply unable to access secure, safe social housing.”

Heavy on the subsidy

According to the LGA, the RTB policy represents heavy public subsidy for home ownership. In its new analysis, the organisation claims that nearly £7bn has been “handed out” in discounts to tenants since the size of the discount was increased in 2012.

This will be “further exacerbated”, the organisation says, following the government’s confirmation that the maximum discounts available to tenants from April 2024 will increase in line with the Consumer Prices Index (CPI) figure of 6.7% to £102,400 outside London and £136,400 in London.

When then prime minister David Cameron sought to ‘revitalise’ RTB with higher subsidies, he offered the sector a ‘sweetener’ on the deal, with the commitment of a one-for-one replacement nationally to curtail any net loss. However, this has proved unrealistic to achieve in practice, and there has continued to be a steady loss of social housing.

To date, the LGA says, over 110,000 homes have been sold but only 44,000 replaced in that period.

According to the LGA, due to the restrictions around the use of RTB receipts, the money raised from the sale of a property is usually not sufficient to cover the building costs of replacing the property. The result has been the decline in the number of properties local authorities are able to build.

The LGA has previously estimated that a further 100,000 homes will be sold up to 2030, with only 43,000 replaced.

The situation is adding to the pressures councils face, the organisation says. Local authorities face acute housing shortages, where more than one million people are on council housing waiting lists, and councils say they are spending £1.74bn annually on temporary accommodation.

Given this, the LGA is calling for major reforms to RTB by giving councils:

  •  Control over how and when monies raised through the scheme should be used on the development, delivery or acquisition of new homes
  •  Power to protect a council’s financial investment in both existing and new social housing stock from a loss-making transaction
  •  Flexibility for councils to shape the scheme locally so it works best for their local area, housing market and people

Rodwell added: “It is time for the government to overhaul a system which has seen our social housing stock significantly diminish. If the government adopts our proposals this would allow councils to resume their role as a major builder of affordable homes, which support strong and healthy communities and help to build prosperous places.”

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