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Housing

Right to Buy: Boris Johnson’s plan to extend scheme branded the ‘opposite of what the country needs’

Boris Johnson is considering extended Thatcher’s controversial housing policy to people renting from housing associations – but experts say the country needs more social housing, not less.

Boris Johnson’s plan to extend the Right to Buy scheme to let housing association tenants buy their home at a knockdown price is being criticised as the “opposite of what the country needs”.

The prime minister is looking to give as many as 2.5 million people the chance to buy their home for a discount of up to 70 per cent of the market price, depending on the number of years they have spent living in the property.

Johnson is also exploring using money spent on housing benefit to contribute to mortgages, according to reports in The Daily Telegraph. A government source told the newspaper the PM “has got very excited about this”.

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A government spokesperson told The Big Issue: “We want everyone to be given the chance to own a home of their own, and we keep all options to increase home ownership under review.

“Recent statistics show that the annual number of first-time buyers is at a 20-year-high, helped by our Help to Buy Scheme for first time buyers and Mortgage Guarantee Scheme to expand the availability of low deposit mortgages.”

The move, revealed just days before local elections in England, has been labelled a ploy to win votes from low-income households in traditional “red wall” areas.

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Lisa Nandy, Labour’s shadow housing secretary, said: “This is desperate stuff from a tired government, repackaging a plan from 2015.

“Millions of families in the private rented sector with low savings and facing sky high-costs and rising bills, need far more ambitious plans to help them buy their own home.

“These proposals would worsen the shortage of affordable homes.”

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Polly Neate, chief executive of Shelter, took aim at the plans and the policy itself, which has seen only a fraction of the social homes sold off to the private sector replaced.

“The hare-brained idea of extending Right-to-Buy to housing associations is the opposite of what the country needs,” said Neate. “There could not be a worse time to sell off what remains of our last truly affordable social homes

“Right to Buy has already torn a massive hole in our social housing stock as less than 5 per cent of the homes sold off have ever been replaced. These half-baked plans have been tried before and they’ve failed.

“Over one million households are stuck on social housing waiting lists in England, and with every bill skyrocketing, the government should be building more social homes so we have more not less.”

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What is the meaning of Right to Buy?

The Right to Buy scheme was originally the brainchild of Margaret Thatcher in the Eighties. 

The scheme was initially designed to allow council house tenants to buy their home at a large discount with the government issuing local authorities receipts to build or acquire homes to replace them.

The policy is meant to help people who wouldn’t be able to afford to buy their home to get on the property ladder. The discount they receive could mean they can purchase a property with a mortgage without having to find the cash for a deposit. 

But the policy has since been criticised for the erosion of social housing stock with thousands of homes sold into the private sector, leaving a shortage of affordable housing that has contributed to the housing crisis. 

Does Right to Buy still exist?

More than two million council properties have been sold in England since the statutory Right to Buy scheme was introduced in October 1980. Both the Scottish and Welsh governments have scrapped the scheme in 2016 and 2019 respectively.

The Chartered Institute of Housing called the policy a “strategic error” in its 2022 UK Housing Review and estimated around 40 per cent of the homes bought through Right to Buy are now rented out privately.

The Conservatives have promised that the scheme would be extended to tenants in housing associations for some time.

It was a commitment made during the party’s 2015 manifesto and that pledge was followed up in the 2015’s Queen’s Speech with the announcement of a Housing Bill that would “dramatically extend the Right to Buy to the tenants of housing associations – putting home ownership within the reach of 1.3 million more families”.

Ministers agreed an extension on a voluntary basis with the National Housing Federation in 2015 but progress slowed as David Cameron was replaced by Theresa May.

The government did launch a pilot scheme to test the idea in the Midlands in August 2018. Almost 1,900 homes were sold in the two-year pilot. A report assessing the pilot published in February 2021 found the scheme mostly helped people in the 35 to 44 age bracket with an average household income of £34,666.

If the scheme was in place for 10 years, 223,843 homes would be sold, according to estimates in the report. Ministers promised to assess the impact of the pilot before taking next steps to help people into home ownership.

But while Right to Buy may already be helping people on to the housing ladder, it is leaving a dearth of affordable homes and social housing stock.

Official figures show that there were 36,380 additional affordable properties started or acquired in England between 2012/13 and 2020/21 “falling short” of the replacement target of 46,108 homes.

The Local Government Association has previously called for ministers to reform the scheme so to allow councils to keep 100 per cent of the receipts from homes sold to reinvest in building new properties.

With affordable housing already at a shortage and house prices soaring across the board despite the cost of living crisis, critics of the policy warned building more homes is a more sustainable option to help people own their homes.

Harry McKeown, the head of housing, care and support at YMCA St Paul’s Group said: “I’ve worked in housing and homelessness for 20 years. It’s abundantly clear to me the UK’s housing crisis can be traced back to 1980 and Thatcher’s Right to Buy scheme.

“This announcement is a transparent attempt to sway a group of people who cannot access social housing – let alone buy it.

“Boris Johnson professes to be a historian. We must learn from the mistakes in our history – not repeat them.”

Last year changes freeing up how councils could spend Right to Buy receipts were brought in following a consultation. Before that, authorities had to spend the cash within three years or hand it over to the government – yet only 30 per cent of the cost for new developments could come from Right to Buy receipts. Councils argued their hands were tied when it came to spending the money.

The changes give councils five years to spend the money and allow 40 per cent of costs to be made up of Right to Buy sales.

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