The Tory Right to Buy for HA tenants is fundamentally unfair

Mad Hatter's Tea Party

“Sell council houses to subsidise HA RTB sales? And I though I was mad.”

Part of me thinks that this election proposal to extend the Right to Buy (RTB) to housing association (HA) tenants is actually an admission by the Tories that they have no chance of winning a majority in this election.  In this case there is nothing to lose by floating crazy policies which you know have no chance of ever getting through coalition negotiations.

An unfair transfer from poor to rich

However, on the off-chance that they are serious, there is a serious unfairness at the heart of the proposal which will see the poorest communities subsidising the better off.  The money to pay for the policy is meant to come from selling off council houses, but only a minority of local authorities still own any housing stock – about 100 out of 326 English authorities.  This means the entire burden of funding a national policy will fall on this minority.

This would be bad enough in its own right, but if you consider the disparity between the LAs that own stock and those that don’t, it is actually much worse.  This is because the LAs who retain their council homes tend to be those urban and with more deprived communities and those who have no stock are on average leafier boroughs or rural, with wealthier populations.

If all HAs are to be reimbursed for the RTB discounts, this means that the money for HA sales in LA areas with no council homes has to come from outside the area – from LAs that do own stock.  On average this will see a transfer of assets from already poorer areas, to already richer ones.

Beggar Wolverhampton to help Elmbridge

Esher, Elmbridge Borough, Surrey

Esher, Elmbridge Borough, Surrey

For example, Elmbridge in Surrey a very pleasant place and typified by high incomes and very high property values, transferred its own council houses, so has nothing to lose from this policy.  However if an HA in Elmbridge sells a home through this RTB scheme, it will get reimbursed the full market value (likely to be a large sum) by the Government, so be well placed to build a replacement.  But how is this to be paid for?

Heath Town estate, Wolverhampton

Heath Town estate, Wolverhampton

In order to give money to the HA in Elmbridge an LA that does own stock will have to sell some homes.  For example, a place like Wolverhampton, one of the most deprived parts of the country, where the council owns lots of homes but is characterised by low property values.  Even the smart parts of the city don’t command huge house prices and on a typical housing estate a  nice modernised 3 bed semi might only be worth £75,000-£100,000 on the open market.  How  many of these homes would poor Wolverhampton be forced to sell in order to send money to wealthy Elmbridge?

No such thing as a free lunch

nofreelunch-200x200

The Tories want a free lunch on RTB, but it will actually come at a real cost to some of the poorest in society.

Let’s not forget that you cannot simply sell council homes and use the whole receipt to fund the scheme.  There is attributable housing debt attached to all council homes which would have to be repaid, early repayment also attracts an additional cost.  The selling LA would also suffer loss of future income which would need to be recompensed or risk detriment to the current tenants.  The net receipt would therefore be far lower than the sale price.

In the example I have used, Wolverhampton could well lose two council houses to fund RTB discounts in Elmbridge which would see little net loss in affordable housing.  It is hard to see how this is anything other than a regressive redistribution of wealth from the poor to the rich.  Not only is the Tory proposal a bad one, it is also grossly unfair and will tend to increase inequality.

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10 thoughts on “The Tory Right to Buy for HA tenants is fundamentally unfair

  1. Bob

    Tory scum. A further attempt at privatisation. Also how could say cannock sell homes if the vast majority are tenanted?

    Reply
      1. Bob

        I cant see how it will work to be honest. For a start the govt dont actually own any of the stock. The individual councils do.so technically surely they cpuld tell the govt to get lost?
        Eg when councils take their housing back in house from almos they don’t have to ask the govt for permission? In the same vein that the govt brought in affordable rents, not many councils have taken it up. ( notably housing associations have lapped it up!)

      2. Bill Heywood Post author

        Sadly we know that central government can force local authorities to sell homes even if they don’t want to – look at the current Right to Buy. If it uses primary legislation then there isn’t anything that councils can do about it. As HAs are not state bodies the legal position is less clear. The Government would probably face a legal challenge under the European Convention on Human Rights which guarantees the right to free enjoyment of one’s property. HAs would argue that being forced to sell at a discount was a breach of this right. Let’s hope we never have to test this argument.

  2. Bob

    I dont think it will happen to be fair. I cant for a minute imagine the tories getting in. Some of their policies are good ones but the horrific ones are much more. I dont think I could ever really bring myself to vote for them. Whats even more appalling though is Labours reaction to it. “We will look very closely at it”. What the hell…

    Reply
    1. Bill Heywood Post author

      This election is very hard to call, but clearly the Tories will do, say and promise anything to try and win. This RTB proposal is shockingly bad even by the Tories low standard on housing, but it may be good for winning votes. It appeals to narrow self-interest and the negative effects are complex and diffuse. On the other hand, more people rent privately and they will be very annoyed to see £billions spent bribing HA tenants. So could be a vote loser too.

      Reply
  3. Bob

    The tories are filth. Always have be always will be. Enoch bloody Powell. .enough said. Thatcher..the most rotten evil divisive uncaring pm ever. Shes not totally to blame for the decline in council housing though sales go back as far as the 50s all she did was enshrine it in law that you could. Horrid policies she had though. Nasty cruel etc. This could lead to the ruination of small to medium HAs to be fair, leading to more mergers which is of course what the tories would like

    Reply
    1. Bob

      Actually thinking about it this is nothing more than an attempt to privatise whats left of council housing! Why shouldnt HAs be forced to sell their highest value stock off?! What next tenanted homes being flogged to HAs ??? What a disgrace. ..

      Reply
  4. Bob

    Whats your views now theyre in Bill? And its becoming policy. Could it screw up your business plans?

    Reply
  5. Bill Heywood Post author

    Bob, my critique remains the same – it is a terrible policy per se and also a grossly unfair one for the reasons outlined above.
    However it won’t make much if any difference to us if we transfer. Our tenants have the RTB now and this will be preserved post transfer.
    The key local factor is that most of our stock is designated defective non-traditional construction which makes it hard to mortgage. We will always have RTB sales whether we transfer or not, but nowhere near as many as if our properties were traditionally built.

    Reply

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