Councils ‘spend millions buying back Right to Buy homes’
TOWN HALLS have spent millions buying back homes sold off under Right to Buy as they battle housing shortages, according to new research.
Freedom of Information requests by the BBC show that the London Borough of Islington has spent more than £6.2m to buy back 25 homes sold for less than £1.3m between 1989 and 2005.
In one case, a property sold for £17,600 in 2004 at a discount of £26,400 was bought back by the council 11 years later for £176,750.
The BBC contacted 10 local authorities where housing waiting lists have risen for four consecutive years.
Wakefield Council in Yorkshire spent more than £2.5m to purchase 35 homes sold for just over £981,000, while Camden spent more than £2.5m on 29 homes, 11 of which were originally sold for around £335,000. In Oldham, the council spent £60,000 to buy two flats sold for £27,260 but spent another £100,000 to refurbish them.
Iona Bain, founder of the Young Money Blog, told BBC News: "The unfairness is accentuated by the fact that someone who could take advantage of Right to Buy has not only benefitted from living rent-free for 20 to 30 years but now can pocket inflated profits by selling at a time when councils are desperate for homes.
"They have lucked out from an extraordinary period of house price rises, unprecedented pressure on the housing system and major flaws in how this scheme was devised."
Islington said it is no longer buying back ex-council homes and has launched the “biggest home building programme in a generation” to deliver 500 new council homes for social rent by 2019. Camden's cabinet member for housing Cllr Pat Callaghan said: "We intend to build over 1,000 council homes - but with 5,000 people on our waiting list, we need Government backing to fully meet our residents' needs."
Right to Buy was originally introduced under the Thatcher government in 1980. It was ‘reinvigorated’ in 2012, with increased discounts for tenants that now stand at up to £104,900 in London and £78,600 elsewhere.
The policy has also been extended to around 1.3m housing association tenants, with discounts funded by forcing councils to sell off high value homes when they become vacant. The extension was criticised by MPs, with the Public Accounts Committee saying ministers have no idea how much the policy will cost or whether homes will be properly replaced.
The Government says homes sold off under Right to Buy will be replaced on a one-for-one basis, though not like-for-like.
However, official figures show replacements lag well behind sales. There were 12,246 Right to Buy sales in 2015-16 – more than double the total of 5,944 for 2012-13 – but just 2,055 starts and acquisitions.
Housing minister Gavin Barwell has said the policy “plays an important part in building a country that works for everyone”.
Councils in England have also argued for reforms, saying national restrictions mean they retain only around a third of sale receipts, which makes it difficult for many to fund replacements.
The Local Government Association forecasts that 66,000 properties will be sold under the existing Right to Buy scheme by 2020 but local authorities will struggle to replace the majority of these homes, exacerbating the housing crisis, fuelling homelessness and increasing spending on housing benefit at a time when there are already 1.4m on housing waiting lists.
It has called for councils to retain 100 per cent of sales, as well as the power to set discounts to reflect local house prices.
Kate Webb, head of policy and research at housing charity Shelter, said: “If Right to Buy is to work then it has to be accompanied by an iron-clad guarantee to replace properties sold on a like-for-like basis.
“Otherwise, councils simply won’t have enough properties for all those families crying out for a home and will left paying the price for generations to come.”