The election is making me ranty. Today, the Tories announced their manifesto, the most newsworthy bit of which is about extending Right to Buy – from tenants in council-owned properties, to those in Housing Association-owned properties.
Now, the ways in which is this is stupid, badly thought through, unworkable, and probably illegal, are many and varied. Allow me to summarize:
- I’m not sure the Tories have a very clear idea of just what a Housing Association is. They are independent businesses. Social businesses, sure, not-for-profit organisations, but that doesn’t mean they’re allowed to make a loss, and since they are not owned or controlled by either the local councils, nor central government, it seems very odd to make an announcement like this which will essentially put them in a position of being legally obliged to sell their assets at a loss. Because,
- Right to Buy, as I understand it, entitles tenants who have lived in one property for five years or more to choose to purchase that property at 2/3 of its market value. Now, if a housing association happened to receive that property for nothing, or as near to nothing as makes no odds, in an asset handover from the local council, one could argue that they have made a significant profit, even if they’ve spent some money on maintenance or renovation in between times. But if they built that house themselves, having borrowed money to do so, on the assumption that it would represent an income-generating asset for the foreseeable future, then they run the risk of making a significant loss. Whether that loss is enough to send them bust is entirely dependent on the balance of their property portfolio – whether the tenants who want to buy happen to be living in properties that won’t make a loss if sold, in enough numbers. No-one saw this announcement coming, so no housing association is going to have a contingency for it. There are no reserves funds sitting in the bank, to insulate against this eventuality. They will just go under.
- The idiocy of declaring that the shortfall will be made up by councils selling their “more expensive” council houses and passing the money to housing associations, rather beggars belief. My council owns no houses. None. They passed them ALL to a housing association, years ago, and therefore have nothing to sell, expensive or otherwise. Even if they did have some, the chances of them being anything other than the cheapest properties, in the worst states of repair, in the dodgiest neighbourhood, are slim in the extreme. Unless your council happens to be Westminster, I suppose.
- Since this sets a precedent for central government placing a legal obligation on private organisations to sell their property assets at a loss, if I were a private landlord, of any scale, I would be looking distinctly anxiously at this development. Because, what is to stop them subsequently applying the same rules to me? My tenants have the right to buy my house, and at a price I wouldn’t normally accept, but I have no choice. That sounds ludicrously unlikely, on the one hand, but on the other, what’s the difference? My desire to make profit? Isn’t a tenant just a tenant, irrespective of the landlord’s business model?
- And finally, what is to become of social housing in the UK? There is already a massive shortage of decent, affordable rental properties in many parts of the country, which is largely attributed to the policy decision NOT to spend any money brought in through Right to Buy on replacement housing stock. Which is the obvious thing to do. By consistently diminishing the available stock of social housing, we have made a general housing shortage, which has brought private landlords in a lucratively desperate marketplace, where rents can soar to meet insatiable demand. When rent is high, property value also goes up – since even expensive property stands a good chance of being profitable – which then means that even owner-occupiers are affected by the sale of council houses they may never have used. But since Thatcher’s government was essentially driven by an ideological desire to get the state out of housing altogether, one can only assume that the extraordinary housing bubble that has characterised most of the last 30 years, was the point. If you own property, you win. If you want to buy property (and that includes up-shifting for the extra bedroom/big garden/better school catchment area, which is proportionally more expensive, and therefore out of reach of your fairly ordinary salary), you lose. It’s the Haves pulling the ladder up behind them, against the Have Nots. Unless you’re one of the lucky few Have Nots who are in social housing, because you can get a house for 35% off, for no apparent reason.
The thing is, I’m not necessarily against Right to Buy, as a principle. I believe in wealth equality, and the idea of putting a system in place that could, within a generation or so, give almost everyone the option of owning their own home, seems, as even David Cameron said today, an ultimately democratic redistribution of wealth. But only if you treat it as a policy for a generation – not a one-off sale of the family silver (and how overused that phrase was of Thatcher’s government), but an on-going philosophy of investing in new, affordable homes, for people to rent, or rent with a view to later buying. If you take the money you make, and use it to build new houses. If you are prepared to invest some actual government money into making up the shortfall, so you can continue to maintain social housing stock at a certain level. If you regard the job of government to make the world fairer, more even, to spend a little in order to reduce the inequality, and actually lift people out of poverty. Imagine a world where everyone who wants a house can have one. Imagine a world where no-one lives in low-quality rented housing because it’s the best they can manage, but where only people who have actively chosen the convenience of renting (of calling the landlord when things break, or of being able to move around frequently) are doing so. Not everyone wants to own their own home, but the basic security of doing so should be available to anyone, surely?
If you replace the sold social housing, then the private rental market doesn’t explode. The former council houses don’t end up in the hands of private landlords, because the market is so much less buoyant. No-one pays over the odds to live in a house, if they can still get the identical one next door for a reasonable rent. Private landlords have to up their game in terms of housing quality and customer service, if social landlords are in the marketplace, offering more for less. The housing market is ripe, nay, desperate, for disruption, and social housing is the way to do it. Offer the right to buy, by all means, but invest in making the scheme sustainable – don’t just sell all the houses until they’re gone.