Mayor slams “dangerous” right to buy as extent of council house sell-ons revealed
- Credit: PA Archive/PA Images
The Mayor of Newham has demanded an end to the divisive right to buy policy as new figures reveal former council homes in Newham have been re-sold to the tune of £83million.
Since the Land Registry first started keeping records at the turn of the millenium, a total of 498 ex-council dwellings bought under the scheme have been sold on by owners.
Many were re-sold for more than 10 times their value under right to buy, which since 1982 has allowed long-standing tenants to buy their homes from the local authority at a heavy discount.
Others were sold on within months of purchase from Newham Council, which now has more than 28,000 households on the social housing waiting list and 5,200 people in temporary accommodation.
The Mayor of Newham, Rokhsana Fiaz, said: “We are fully aware of the significant issues caused by the Right to Buy and this is why I am calling on the government to end it. It is a dangerous policy which has obstructed our ability to effectively address the housing crisis.
“It is outrageous that in Newham alone we have lost nearly 10,000 social homes since the policy was first introduced.”
Ex-council tenants in Newham have made an average profit of £98,938 each since 2000 by re-selling – and in many cases, hundreds of thousands of pounds more as house prices in London soared.
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Sixteen properties were bought from the local authority for less than £25,000 and later sold on for a combined total of £2.4m.
One house purchased under right to buy for just £11,400 in November 2001 was sold in March 2004 for £144,995 - more than 12 times what the council was paid.
Another bought for £33,750 in 2002 was sold on to private owners in 2017 for £370,000.
Some houses changed hands again almost immediately after purchase, with one bought on November 11, 2002 for £14,250 was then sold on April 29, 2003 for £123,000, making the former tenant an effective profit of £680 a day.
Councils are currently hamstrung by the rules around right to buy receipts, which stipulate that money received can be used to fund just 30 per cent of the cost of a replacement home.
In the past five years 1,221 social homes have been delivered in Newham but 810 have simultaneously been lost to right to buy, while the council lost an overall £8.3m through right to buy discounts.
Last month it also emerged that more than 800 homes passed on under right to buy are being rented back to the council as temporary accommodation, at a cost of £13m a year.
Ms Fiaz added: “We have lost thousands and thousands of council homes to the private rented sector.
“It is shocking that nearly half of all properties purchased through right to buy in Newham are now in the private rented sector with private landlords raking in sky high rents.
“It has also led to the obscene and absurd situation where we are forced to spend £13m to rent back some of the homes it has been forced to sell.
“This cannot continue. It is essential that we should be able protect our housing stock and not see it depleted further.”
In line with other councils, the local authority also wants to see all restrictions on right to buy receipts lifted.
Across the UK right-to-buy homes re-sold since 2000 have made private individuals a collective £6.4bn profit, while more than a million people are on waiting lists for social housing.
A spokesperson for the Chartered Institute of Housing said: “We think the time is right to suspend it [the policy] to stem the loss of homes for social rent, which are often the only option for people on lower incomes.
“Not only are we failing to build enough homes for social rent: right to buy means we are losing them at a time when millions of people need genuinely affordable housing more than ever.”
Polly Neate, chief executive of Shelter, added: “The chronic shortage of social housing available is nothing short of a disaster. Hundreds of thousands are homeless and millions are struggling in deeply insecure and expensive private renting, so replacing social homes on a like-for-like basis is critical.”
Right to buy sell-off: the national picture
Right to buy gives social housing tenants of two years or more the chance to buy their home from the local authority.
Properties are sold at between 35 and 70 per cent of the market rate, depending on how long the tenant has lived there.
According to the Land Registry, between April 2000 to March 2018 some 110,000 former council houses bought under right to buy in the UK were sold on.
Social housing in Britain has made private owners £6.4bn in collective profit, or £4.3bn in real terms - and £2.8bn in London alone.
The average time ex-tenants in the capital held onto their right to buy home was 2,400 days, or six and a half years.
But eight in London re-sold their ex-council home again within one week of purchase.
According to the latest government figures, less than a third of homes bought under right to buy in England since 2012 have been replaced.
In a statement, the Chartered Institute of Housing told the BBC the policy had effectively been “Britain’s biggest privatisation”.
The government is now developing a new version of the policy which would apply to more people.
Tenants who sell within five years should have to pay back some or all of their discount, and those who sell within 10 years have to offer their council the chance to buy it back first.
Housing minister Kit Malthouse MP said: “Under right to buy, the government has helped nearly two million people achieve their dream of home ownership and we are working hard to make sure that everyone in the country who wants it has a shot at getting on the housing ladder.”