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Is right to buy the Tories’ stupidest policy?

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Is right to buy the Tories’ stupidest policy?

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Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Finance, Local Government, Regulation

Is right to buy the Tories stupidest policy? Is right to buy the Tories stupidest policy?

By 24dash reporter Max Salsbury

Over in Harrow, something deeply stupid is happening.

The council is leasing back 35 properties it used to own until they were sold off under the right to buy (RTB) scheme.

This preposterous situation is costing the council just under £500, 000 a year, over £14,000 per property.

How did it come to this?

Well, as we all know, economic genius Margaret Thatcher thought it’d be a great idea to offer social housing tenants the chance to own their own homes by selling them the council properties they lived in, with discounts of up to 50% off of a property’s market value.

Either forgetting or, more likely, not caring that council housing only existed in the first place to provide people who can’t afford to buy a home of their own a place to live, local authorities only received half of the sale price and were ordered to use it to pay off their debts rather than building new properties.

Thus, by 1987 well over a million council homes had been lost while very little were built to replace them.

RTB sales cooled in the 90s, and when Labour seized power in 1997 they slashed the discounts available to tenants, reducing sales further.

However, after sort of regaining power in 2010 the Tories set about driving RTB sales with increased relish.  In 2012, discounts soared to £75,000 (or 60% of the house value. 70% for a flat) while in London the maximum discount was increased to £100,000.

And the policy reboot worked a treat. Across 2011-2012, 2,638 social housing homes were sold off, but sales soared to 11,238 through 2013-2014.

Taken together with sales to housing association tenants, over 19,500 homes have been flogged off since the launch of the ‘reinvigorated’ right to buy.

Harrow isn’t the only London local authority stuck in the moronic position of paying private landlords a fortune to rent back homes it effectively gave away.

A 2013 report by London Assembly member Tom Copley revealed that 36% of homes sold under RTB in London (52,000 homes) were being let out by councils from private landlords.

Writing at the time, Copley said: “As a policy, RTB is possibly unrivalled in representing such poor value for money to both taxpayers and local authorities. For taxpayers, they not only funded the initial building of the council home, they then subsidised the substantial discounts offered to tenants and then – once the homes were sold – missed out on the rental income that would have covered the build costs.”

There you have it. A Tory policy that was designed to create homeowners and save money that has created an army of buy-to-letters and cost the taxpayer a fortune. The Tories and their fans never shut up about how Labour don’t know how money works etc. And the Tories do, do they?

And if you think all of this is merely the view of a second-rate hack, check out this invective from respected sector sage Nick Atkin, CEO of Halton Housing Trust.

Atkin has challenged the government’s claim that every RTB sales leads to a 1:1 replacement. This, though Atkin is far too polite to put it this way, is bollocks.

As the CEO explains, after the heavy discounts Halton needs to sell seven homes to be able to afford to build one replacement.

Meanwhile, up in Scotland, RTB has bitten the dust. Passed in June, the Housing (Scotland) Bill is set to come into effect in 2017 and will abolish the ridiculous policy. The Scottish government believes the move will prevent the sale of up to 15,500 social houses over the next 10 years.

RTB is a stupid and extremely damaging policy. It has taken homes that were designed for people on low incomes away from local authorities and put them, in many cases, in the hands of extremely rich property magnates – and all for what?

If Ed Miliband fancies a crack a trying to solve the housing crisis, he might want to have a look north of the border and commit to ending this atrocious and incompetent scheme. 

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