Local Government Association urges Right to Buy reform

The Local Government Association has called on Sajid Javid to use next month’s spending round to relax the financial restrictions governing Right to Buy (RTB).

The Local Government Association (LGA) is urging the chancellor to reform the RTB regime and allow local authorities to keep all the receipts they get from selling council homes, instead of the third they are currently allowed to retain, the rest going to the Treasury.

The loss of revenue means many English local authorities can’t afford to replace the housing stock sold, the LGA said. While just a fifth of the homes sold through RTB between 2011/12 and 2017/18 – equal to 11,300 – were replaced, around 58,000 homes for social rent were lost over that period.

Official figures also show that local authorities in England sold 11,833 homes under RTB last year but only built 2,560 to replace them. 

At their peak, RTB sales in England hit 167,123 in 1982/83, when local authorities built just under 32,000 new homes.

While councils in England are certainly building more homes today than the historic low of a mere 60 across the entire country in 2000, a repeat of the 136,000-figure recorded in 1970 is very unlikely.

Judith Blake, the LGA’s housing spokesperson, said although RTB enabled council tenants to own their homes the system urgently needed reform, as councils’ housebuilding activities couldn’t keep up with the rate of sales.

“Current arrangements are restricting councils from being able to replace homes being sold under the scheme,” she said.

“This loss of social rented housing risks pushing more families into the private rented sector, driving up housing benefit spending and rents and exacerbating our homelessness crisis.

“There are millions of people on council waiting lists and councils can further get on with the job of building the new homes that people in their areas desperately need if they are able to keep all RTB receipts to replace any homes sold,” Blake added.

Last October, Theresa May’s government announced it was lifting local authorities’ Housing Revenue Account borrowing cap, which previously limited councils’ ability to fund housebuilding programmes.

While this was generally welcomed, issues remain around RTB.

Last month Darren Rodwell, leader of Barking & Dagenham council, gave Housing Today an insight into how RTB had affected his borough’s housing provision. “At one time we had 50,000 council homes, but now we’ve got 17,500,” he said.

“The properties [we lost] went through Right to Buy and they end up becoming buy to let. We’ve lost rental income, plus the value of the homes that have been bought and then re-sold has also gone.”

He gave the example of a house on the Gascoigne estate in Barking which had been sold and was now being let privately for £2,000 month, while the neighbouring property remained in council ownership at £500 a month. 

“The Right to Buy model works for neither the local community or the country. There is a social cost,” Rodwell said.