The housing market is fundamentally different to that of 1980. But was Right to Buy a good thing, and is it a useful measure now?
There are not many policies that are seen years later as game changing and iconic. Right to Buy (RTB) is one of the few. Whenever we think about Thatcherism and the early 1980s, RTB is one of the first things that people identify. There was, of course, a lot of debate then about whether or not it was the right thing to do. But it took hold so comprehensively that it has been part of the housing landscape for 35 years and has looked for most of that time, in England at least, to be politically untouchable.
So was it a good thing then, has it been a force for good throughout that time and is it a useful measure now?
A short answer is that it was fantastic for those who happened to be in the right place at the right time and were able to take advantage of a sale of the century style bargain. Although some people resisted because they thought it was wrong in principle to sell council homes, anyone making an economically rational assessment would immediately conclude that they should buy if they possibly could. So it was great for the individuals - but it's not nearly so clear that it was good for anyone else.
There has been much written and said over the years about the impact of RTB on our system of housing supply. This is still heavily contested territory, although I think there is broad agreement that the failure to replace the homes sold with new homes available for rent has contributed to the present position where we have a huge undersupply of good quality homes available for new households to rent at affordable prices. It has also contributed to the residualisation of social housing.
Many people argue that councils and housing associations should have been more able to allocate to people on different incomes rather than focussing on those in the very greatest housing need. That was made much more difficult by the lack of access that RTB brought in its wake. And of course we now know that around 35% of all homes sold under RTB are back in the rented sector, but as private rent, managed by Buy to Let owners, at much higher rents. As many of these properties are rented to people who in the past might have accessed HA or council homes, there is a pretty strong argument that the huge levels of housing benefit now paid out are at least in part an outcome of RTB.
So that's where we are. But does RTB still has a key role to play?
The market now is fundamentally different to that of 1980. We have a huge need to build new homes and to regenerate some areas of economic challenge and market collapse. Despite the government's promise that the new rules for RTB would deliver one new home for every one sold, in fact we are building less than one new for every seven sold. That's like trying to fill a bath with the plug out.
The fact of selling with huge discounts means that the lucky buyers can cash in just a few years later and the economic benefit of years of high quality maintenance goes to one private owner rather than being retained by the landlord who has invested over the years. The equity released goes into private hands rather than being used to build or renovate. We have a government that is imposing large cuts in public support for people on low incomes who rent (which is what the bedroom tax does) but is happy to see ever larger public subsidies being given to people a bit better off to help them to buy. And these are huge subsidies. Where else will the state in practice gift you up to £100,000 to buy an asset? Why is that a better use of scarce resources than using it to build new homes? And why only for people in social rented homes? Why should a private renter not be given £100,000 to buy a home?
There is not much argument now that we have a housing crisis. Labour has set up the Lyons Review to explore how to deliver at least 200,000 new homes a year every year within one parliament. The government has set up a review of what more local government can do to support increased supply. Housing associations are being exhorted daily to use the equity in their existing housing stock more efficiently to support new supply and regeneration and new projects. Quite right too. I often say that we have to be bold in our thinking and radical in asking new questions to find new answers to the nation's housing challenges.
All of which makes me ask - why is RTB beyond all this? It won't deliver the political impact of the 1980s and won't now transform tenure patterns. It doesn't deliver new supply and it completely fails to make any offer at all to anyone who hasn't had the good fortune to live in a council or HA home. It is causing huge financial problems for a small number of housing associations. What is government's justification for imposing, without consultation, new RTB incentives on independent organisations without underwriting the financial consequence? RTB undermines the value of new build by local authorities. Councils were never banned from building new, it was just that RTB made any new build economically incoherent.
The critical project of resolving our housing challenge needs long term, strategic thinking with clear goals and commitment to using scarce resources wisely. I think RTB fails that test.
Is this a sacred cow that needs to be slaughtered? I'm not sure. I am sure, though, that it needs to be on the slab and properly examined. If nothing else, the time has certainly come to talk about it.Suggest a correction