An Extension Of The Right To Buy?
Prior to his resignation, Boris Johnson recently made comments about a desire to extend the Right to Buy to housing association tenants. Some housing associations agreed to a voluntary extension of the Right to Buy in 2015, the prospect of a wider extension would increase home ownership at a time when this is decreasing, but it also raises a number of concerns about the wider impacts of availability of social housing.
The construction of social housing reached a peak in the 1960s, with over 400,000 homes being built each year and has dropped off considerably since then, with decades of under-investment creating an increasing reliance on private sector accommodation. By the 1980s only 200,000 homes were being built per year. It is estimated that 145,000 affordable homes need to be built each year to meet demand. The actual amount of affordable homes built per year falls far short of this, with only 6,566 built in 2019-20. Over a million households are on waiting lists for social housing, with approximately 4.4 million homes left in the social housing sector.
The Right to Buy Scheme was introduced for council tenants via the Housing Act 1980, as part of the Conservative government led by Margaret Thatcher’s drive to increase home ownership. It enabled council tenants to purchase their homes at heavily discounted rates. In the early 1980s, 55% of the British public owned their homes, by 2003 this figure stood at 71%. Approximately 1.8 million social housing properties have been purchased via the Right to Buy. The problem is that housing construction never reached the scale required to replace the social housing purchased. The Thatcherite emphasis on free-market economics and deregulation also led to a swift escalation in housing prices.
Statistics indicate that the proportion of 25-34 year-olds who own their home has fallen from 55% to 34% between 1996 and 2016. Some sources put this at a more stark decrease from 65% to 27%. This is in line with the overall ‘generation rent’ position that people in this age group are increasingly likely to find themselves in – with prospective tenants effectively bidding to obtain a home from a private landlord, given the current position with supply and demand.
While there are of course many advantages to home ownership, the basic problem with removing social housing properties from social housing stock and entering them into private ownership is that this will inevitably create shortages of affordable housing. Unless a large-scale building programme is put into effect to create affordable homes, the recent suggestions of Mr Johnson seem likely to compound, rather than remedy, the housing crisis.
The overall question is, if we are already in a housing crisis, how would an extension of a policy that helped create the crisis help resolve it?