Friday, 23 December 2011

The Right To Buy - Right Or Wrong?

Everyone is entitled to have somewhere they can call home, be it a flat, semi-detached or mansion. A home is the most expensive cost most of us meet in our lifetimes.  Some people buy a home in the hope they can repay their mortgage over their working life while others prefer to rent from their local council or private landlords.

Council housing was originally provided for those who couldn't afford to buy because they didn't have the income to meet the demands of a mortgage company. Over the years it became apparent that some council house tenants had become more affluent and could afford to buy a property, but few left the security of good council landlords who kept their housing stock in good repair.

In those days we had nearly enough council housing for those who wanted to avoid unscrupulous private landlords and weren't in a position to consider purchasing a property.  Until Margaret Thatcher had the great idea of selling council housing to resident tenants. Because councils never replaced purchase stock, within a few years their stocks had fallen drastically and they were left with the more undesirable properties. All over the UK housing was sold off with massive discounts and I knew more than a few people who managed to bend the qualification rules to acquire their parents' council properties.

Because local authorities' rental income was also greatly reduced, they had less to invest in the maintenance of their properties and thus the they fell into disrepair. Tenants were promised double glazing, upgraded insulation and a modern heating system but promises were postponed year after year. The local authorities in Scotland have made staunch efforts to upgrade homes in the past  couple of decades, but they've been unable to build many because they lacked the capital.

In recent years Scotland has begun to build social housing but, sensibly, last year the Scottish government made amendments to the Right to Buy terms and ended the Right to Buy for new social housing and for new tenants. Another important alteration is that now councils can elect their 'pressured areas' and refuse to sell, whereas previously the government elected pressured areas. The Scottish government realised that building houses then selling them may provide jobs but the lack of affordable rented housing still remained.

Scotland appears to be getting its act together regarding social housing stock but what about England?

England appears to be taking an opposing view. Council tenants are to be offered increased discounts of up to £50,000 to buy their homes in a shake-up of the Right to Buy scheme. In some parts of England discounts could be trebled.  The Westminster government are promoting this as 'part of a Government effort to ease the struggle and help some of the two million social tenants in England to buy the property they live in'.

It sounds fine and dandy, particularly when UK government ministers vow that 'any home bought under the scheme would be replaced by an affordable property for rent'.

The plan is to 'get the nation building again' - just as the Scottish government has done in the past few years. However, unless the new homes built in England are not exempt with legislation similar to Scotland's new housing stock, England will not resolve the problem of too few houses available. By offering larger discounts the remaining rentable stock will, quite probably, be of a poor quality as was found back in the 90s once the Act had been on the statue books a few years.

There is no shortage of private or privately rented housing in this area. The need for social housing is minimal in comparison with the big cities.

Several private developments are still trying to sell properties - although most are in the £180,000 plus bracket - yet my local council continues to give them permission to build more estates. Regular readers will know there is one private estate being built within a stone's throw of my home and planning permission was granted because the builder agreed, as per legislation, that 25% of the homes would be social housing provided through a housing association. Last month we were told that the second housing association, which had shown interest, had withdrawn.  The first one withdrew shortly after the diggers moved in.  The reason given to local residents was that neither housing association had enough capital to invest in the project. Eighteen large homes have now been completed and not one has been sold. The social housing, I was informed by the site manager, will be the last to be completed. That was always the case.

Surely where there is a need for social housing - and I'm sure there is one in varying degrees throughout the UK - developers ought to be building those first?  Or is it a sake of hoping that no housing association is ever able to invest and thus the developers will have what they really wanted - an estate full of private housing?

Note:  Observer, one of my regular readers, is highly qualified in all aspects of social housing in Scotland.  I would ask you to please read any response she makes in the comments and may I offer her my apologies for any inaccuracies in the post.



Gedguy said...

Personally, I've always been a supporter of council housing.
What Maggie did was was either a stroke of political and economic genius or a massive attack on the very political basis of social housing and socialist creed. As with everything which first seems to be just black and white, I suspect the answer lies in both of them.
The pure genius of her strategy was marred by the knowledge that she knew that many of the people who initially bought their discounted council houses were never going to be in a position to pay for it because, the other part of her attack on socialism was the destruction of the unions, and therefore, mass unemployment. She saw those poor unfortunates, potential Tory voters, as expendable in the grand scheme of things. I understand why she did this [that's another story] but I will never forgive her.
There will only be an answer to this massive shortage of social housing if there is another building boom in Scotland and that is not going to happen unless we get our independence. If it does I hope we can put in enough legislation to ensure that these social houses are built to a high degree of thermal insulation. They will need to be to ensure that the poor and unemployed are not wasting their money trying to heat badly built homes in the middle of Scottish winters.

Anonymous said...

This is a complicated area. Yes people were encouraged to buy their council houses and they did and for many people that worked out well.

Many other people were encouraged to bu their council house by those who provide the financing. In far too many cases those doing the buying couldn't keep up the payments and lost their home.

The Scottish Housing Regulator has been working with housing associations to enure their stock is upgraded to an agreed standard by 2015. This is progress.

The new money available for building is a good thing. People prefer homes with a front and back door and these new builds tend to reflect that although the styling is mixed to suit need.

The state of some of the stock is shocking and the state that some of the stock is left in after a tenant has moved on can also be shocking.

Progress is being made though on all fronts. It's slow and the current financial situation hasn't and continues not to help.

subrosa said...

Gedguy I support it too, but the sell off left behind the houses nobody wanted to buy because they were in 'bad' areas or poorly maintained.

The cities are in desperate need of more social housing and councils do need to start building modern homes. I believe new homes are well insulated. In the town here there is a very small estate which was built by the SHA and the only complaint I've heard is that there are no garages. Also some think solar power could have been used, but then these were built 10 years ago and things have moved on a pace since.

subrosa said...

The problem with the RtB scheme TT was councils sold but never rebuilt, leaving a longer list of those in need.

That's interesting to know about the SHR, but of course that should have been done years ago when it would have cost far less.

Baron's Life said...

Been a long time but wanted to wish you a Merry Christmas and a very Happy New Year

BrianSJ said...

From memory, the money raised by selling council houses went to central government not councils, so they didn't have the cash to replace the stock. Might well be wrong - it is a while ago now.

subrosa said...

Thank you Baron. I do hope your holiday is restful and enjoyable.

subrosa said...

Brian, yes you may well be right. If I remember the money wasn't ring-fenced so went elsewhere.

Gedguy said...

If I remember right the councils weren't allowed to use the money for building extra houses as the government told the councils to keep hold of the monies to keep down their debts to the banks.

subrosa said...

I think you could be right Gedguy, Have been trying to find info about it but can't, but what you say rings a bell. I do remember lots of councils complaining they couldn't build new houses because the money had gone elsewhere and because they weren't permitted to ring-fence it.

Crinkly & Ragged Arsed Philosophers said...

The fly in the ointment was the fact the councils were not allowed to retain and ring-fence the the cash raised to expand and update the social housing.

In fact councils had to meet all the administrative costs from their local budgets while the capital raised on the sale went to the Treasury.

A logic, when applied to conservative ideology, undermines any social value to the benefit of those of privatization.

Observer said...

Perhaps unsurprisingly I agree with the Scottish government's position on supporting social housing, & disagree completely with the Tories views. Municipal housing first originated to provide decent accommodation for the working class. It was a simple as that. I think over the years they made a lot of mistakes by trying to provide more for less, so they moved away from the back & front door & tenements to high density housing, multi storey & deck access, which did not prove as successful.

We have had a long journey in housing in Scotland, & whilst some local authority stock is still in a very poor condition, the tide is now turning, & with support from the government new houses are being built to very high standards & refurbishment is bringing stock with a long life up to the Scottish standard.

I have been personally delighted to see whole schemes razed to the ground & the tenants rehoused in far better accommodation. No - they should not be allowed to buy these houses because they were not built to become an indivdual's asset for them to potentially make a profit from. It is sickening seeing RTB houses let out privately & knowing that the private tenant is paying double what the Housing Association or Council tenant is paying. Particularly when the state of the private house is deplorable compared to the one which is still owned by the Association or local authority.

I think the original objective behind municipal housing was correct - providing decent housing that the working class can afford. The private sector is not going to do that as well as Housing Associations or local authorities.

If people want to buy a house then that is their prerogative - but people should not feel forced to buy a house because there is no alternative.

Of course the elephant in the room is that if we have affordable social housing for rent then that might drive house prices down.

The completely insane speculative bubble around house prices & the assumption that owning not renting is best was of course a huge factor in the financial crash, so I really do not understand where the Tories are coming from.

What concerns me now are many of the private developments being built. Here in Glasgow they are building high density flats which are being thrown up overnight to a very poor standards, & they are either lying empty or are being bought to rent. These are the slums of the future.

I think we need more regulation of the private sector to prevent this.

Brian said...

I owned (paid the mortgage) and lived in a flat in a small block handy for the station. A private landlord bought another flat on the floor below and it was immediately tenanted by an asylum seeker and very noisy young child who received housing Benefit and Council Tax Benefit. Was that fair on me and the other residents, especially as it adversely affected the value of our homes, according to a chartered surveyor? I suppose it ticked all the social-inclusivity boxes.
My radical idea for private housing is to make one's home subject to CGT (with relief for improvement works). That would discourage houses being viewed as investments.
As for buy to let social housing, isn't there a clause in the sale terms that enables the seller to claw back a tapering percentage of uplift if the buyer sells on within a few years. We would usually iclude that condition when selling surplus properties to get HMG the best deal.

subrosa said...

Crinkly, now I'm not sure about this, but I think here in Scotland the councils were allowed to keep the sale money but they didn't reinvest in housing. Someone will correct me if I'm wrong.

subrosa said...

Yes Observer and England also made bad mistakes building concrete prisons.

I noticed new houses being built on Glasgow on ground which had previously held dreadful housing and in Dundee and Perth there are areas where housing beyond repair has been demolished and new builds are being undertaken.

But like you, I don't agree with folk being able to buy new council (housing association) housing. In the wee estate here half the folk now own their homes (that was on the one third first year, next third year two and complete purchase year three - the fastest way). I know some have now been sublet even though that is against the housing rules but nobody wants to complain.

What never ceases to surprise me in Scotland though is the quality and position of some council housing. It's superb. Look at Ardrossan where these elegant homes sit along the front - all bought now of course.

I think that too much pressure is put on people to own their homes. Even those who are happy renting can feel it. Such a shame.

subrosa said...

Yes Brian, I suppose it did tick all the boxes but can't decide if it was fair. There's a killing for private landlords in homes like yours and they don't hesitate to grab them.

Yes there's something in the legislation about resale timing but I don't think that affects sub-lets.

Observer said...

Subrosa - the sales from Council housing in Scotland could not be re-invested in either capital or revenue spend, something which was done I believe quite deliberately because the Tory government wished to a) promote ownership, & b) promote Housing Associations over local authorities. Divide & rule & for a long time it worked. I think the SG are getting away from that now although there is still fierce competition for funding.

Labour were absolutely shameful in allowing so much of the Tory policy to continue in Scotland, John Wheatley must have turned in his grave. It needed the SNP to come in to change the emphasis. They are by no means perfect but I am not going to quibble compared to what we had before.

This is not me just saying boo Tories, but I don't think the way that they approach housing works.

subrosa said...

Thanks for clearing that up Observer. I wasn't too sure about it here as I was living down south at the time and of course no internet.

I'd agree with you about the tories and council housing though, as I watched the stock rapidly depleting in Shropshire at the time of the initial sell off and not one was built.

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