Savills has suggested that it may be time for a fundamental review of what’s left of the flagship policy of Margaret Thatcher’s governments of the 1980s - Right To Buy.
RTB, under which many social housing tenants can buy the properties they live in at discounted prices, was introduced in 1980; in recent years the devolved governments of Scotland and Wales have effectively scrapped the policy, although it remains in force in England and its retention was a policy pledge of the Conservatives at the 2017 election.
However, Savills - in a blog on its website by housing consultancy director Steve Partridge - says now may be the time for a radical rethink in England.
Partridge says that recent Savills research for the Local Government Association analysed how current rules worked on the reinvestment of RTB income by local authorities.
The research concluded:
- because of borrowing restrictions, local authorities face financial issues “leaving them struggling to replace any homes sold through RTB”;
- a centrally-defined ‘matched funding’ policy to help build replacement homes does not work for many local authorities;
- there was a need to extend the definition of and limitations on the kind of housing that can be built by local authorities using reinvested RTB receipts;
- the current system of discounts for tenant-buyers was “a blunt instrument” which meant that in some areas of the country homes were sold “at really low prices”. Savills’ research calls for reducing discounts selectively.
“And in terms of actually building new homes” explains Partridge, “the biggest challenge is that authorities must reinvest receipts within three years or lose them –- this despite the fact that the Home Builders Federation itself says that the average time from planning permission to completion is 3.25 years.”
In February the Local Government Association warned that the Right To Buy policy in England was unsustainable without local councils being given the right to set discounts for their areas and replacing every home sold with a new one.
The GLA, which represents 370 councils in England and Wales, says that since the government increased the size of the discounts available in April 2012, the average discount has increased by 132 per cent to more than £60,000 – effectively selling properties at almost half price.
Councils are warning that this has led to a quadrupling in the number of RTB sales, which they have been unable to keep up with and replace.