Over a third of London's right to buy homes now privately rented
Published by Max Salsbury for 24dash.com in Housing and also in Local Government
More than a third of homes in London sold under right to buy are now being privately rented, new research has revealed.
The data, compiled by the London Assembly's Labour housing spokesman, Tom Copley, shows that 36% of the 52,000 council homes sold off under the policy are now in the hands of private letters.
According to Labour, the report's findings reveal the increased cost to taxpayers and local authorities under right to buy in the form of soaring welfare spending due to the higher housing benefit payments being paid to tenants in ex-council homes that are now charged at market rates.
The report also shows that local authorities are frequently forced to rent former homes back at higher market rates in order to discharge their statutory homelessness duties.
Copley is now calling for urgent action to reform right to buy to "alleviate some of the worst excesses caused by the policy" in its current form.
The report’s recommendations include:
• Mandatory covenants on all right to buy properties so they cannot be let through the private rented sector.
• The abolishment of the current system of discounts, which can be as high as £100,000.
• A introduction of a new system whereby local authorities retain an equity stake in any property sold.
• Giving local authorities should have a ‘right not to sell’ if it is not in the community interest to do so or if they believe it would harm their housing operations.
• Replacement homes built with right to buy receipts should mirror the rent, size and tenure specifications of the home sold.
Labour also highlights the conclusions of a report from the London Assembly Housing and Regeneration Committee from last June (‘Rent reform: Making London's private rented sector fit for purpose’) which found that physical conditions in the capital's private rented sector are worse than any other tenure of housing, while complaints against PRS landlords have increased by 47% since 2008. Median PRS rents increased by 12% in 2011 and 9% in 2012.
Copley said: “Today’s report shows for the first time that right to buy, a policy ostensibly about helping aspiring home owners, has led to tens-of-thousands of London’s former council homes being rented out by private landlords. This has helped to fuel the increase in the housing benefit bill, heaped more pressure on local authority waiting lists and led to more Londoners being forced into the under-regulated private rented sector.
"This shows that right to buy currently represents incredibly poor value for money to taxpayers. Not only did they pay to build the home in the first place, they then subsidised the considerable discounts offered to tenants and then missed out on the rental income that would have covered the build costs. Now, we have the indignity of London boroughs renting back their former council homes at higher market rent levels, once again costing taxpayers through the nose.
"This is nothing short of Whitehall-sanctioned robbery of the taxpayer.
"Right to buy has played a central role in causing and exacerbating the current housing crisis. Future governments must recognise that the right of a council tenant to buy their home at a discount, subsidised by other taxpayers, cannot be at the expense of the right of the vast majority of people to have a decent, affordable home to live in.”