Real Estate Blog: Proposed extension of Right to Buy – Kill or cure?
Over the weekend it was revealed that the Government is considering whether to extend the Right to Buy policy to the circa 2.5 million people currently living in housing association properties. The strapline is that it is all about helping “Generation Rent”.
This is nothing new; David Cameron made this a manifesto pledge in 2015, but it wasn’t until 2018 that Theresa May’s government launched a pilot in the West Midlands to test the policy. The pilot, however, was not a particular success and only 1,892 homes were sold against the target of 3,000.
So why revisit this now, especially when the number of first-time buyers is at a record high, due in part to the Help to Buy and Mortgage Guarantee Schemes? Is it purely headline-grabbing from the Government ahead of the local elections?
Behind the politics there are serious questions to be asked about how this would impact on housing associations’ ability to borrow money. For the majority of providers, this is a major element of how they fund the development of affordable housing. If their ability to borrow is reduced alongside the loss of units under a Right to Buy scheme, the result will surely be a worsening of the affordable housing shortage.
We also have to look at the longer-term effects beyond the enabling of homeownership in the short term. Once the houses are sold and therefore free of affordable restrictions, they will simply become ‘fodder’ for the open market, with some inevitably ending up in the hands of private landlords, pushing up the taxpayer-funded benefit bill and adding pressure to local authority waiting lists.
Homeownership should of course be available to all those who want to achieve it, and there are existing mechanisms, such as shared ownership, which allows ‘staircasing’ to full ownership, and Rent to Buy, as well as the generous subsidies available through Help to Buy and other similar schemes.
Don’t we just need to be a bit more imaginative to help people achieve their aspirations, rather than going down the same old road? Opening up the door to sell off the country’s existing social housing stock (of which there is already a shortage) may well create more of a problem than a solution… Isn’t this precisely what happened when the Right to Buy policy was first introduced and part of the reason why we are currently in the midst of the housing crisis that the country currently finds itself in – perhaps another case where we have failed to learn from past mistakes?
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