Right to buy: Sell-off of former social housing earns owners millions of pounds
- Credit: Archant
Former Brent Council housing stock bought under Right to Buy in the last two decades has been sold off into private hands for a collective profit of £176million, new figures have revealed.
Since 2000 – when the Land Registry started keeping records – some 781 council houses in the borough have been re-sold by former tenants.
Most changed hands for many times what they were bought for under the 1980s scheme, which allows council tenants to buy their home from the local authority at a heavy discount.
And contrary to the stated aim of the policy, some owners sold their properties almost immediately after purchase, with one property flogged just two weeks later.
Cllr Eleanor Southwood, Brent Council’s lead member for housing, said: “The consequences of Right to Buy have been huge. It has certainly played a part in creating the housing crisis we now face.
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“The main challenge for local authorities like us is that many of these council homes will never be replaced.
“This makes it harder for us to help families who urgently need safe, affordable homes in the borough.”
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Since 2000, ex-tenants in Brent who re-sold their homes have made an average profit of £117,685 each – but in some cases, the re-sales earned them hundreds of thousands of pounds more.
Twenty properties were bought from Brent Council for less than £25,000 and were later sold on for a cumulative total of £3.2m.
Nine council dwellings changed hands within six months of their Right to Buy purchase.
One somehow purchased for just £3,000 in February 2003 was sold three months later for £246,999 – more than 80 times what was paid to the council.
Another bought for £284,000 in August 2005 was sold just 14 days later for £425,000, meaning its former owner made a staggering £10,071 in profit for every day it was held.
To make matters worse, arcane rules around Right to Buy receipts restrict how town halls can actually spend the money they get by selling homes to their tenants.
Councils can’t fund more than 30 per cent of the cost of building new social housing using Right to Buy cash, leaving them 70pc to stump up elsewhere. Nor can they combine it with grant funding, meaning they must find that 70pc without the help of the government or mayor of London.
The final slap in the face is that if they can’t find a way to use it within those restrictive rules inside three years, they must surrender it to the government.
In Brent, the number of households on the waiting list for social housing had reached 3,498 by the end of 2017/18.
Cllr Southwood added: “We’re doing all we can in Brent to get building again and to increase the supply of properly affordable housing and will use all the powers we have, but the continuation of the Right to Buy policy is yet another barrier we face.”
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.
In recent years there have been calls for the policy to be halted or scrapped outright in England as it has been elsewhere in the UK.
A spokesperson for the Chartered Institute of Housing said: “We think the time is right to suspend [Right to Buy] 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.”
There are still some restrictions on profiting from the legislation. Tenants who sell within five years 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 the home back first – though this could mean at full market value if five years have passed.
Right to buy sell-ons: 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 available 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.
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”.
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 their home back first.
The government is currently reviewing right to buy and is set to extend it to apply to more people.
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.”
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