There is a fundamental dichotomy at the heart of the government’s analysis of the housing crisis. On one hand, ministers acknowledge that the housing market – over which they have presided for the last nine years – is broken, and requires change. On the other, they seem incapable of enacting the reform that’s urgently required to fix it. This would of course necessitate a publicly-led programme of large scale housebuilding in places where people want to live, meaningful reform of the private rented sector, and an end to sticking plaster solutions such as Help to Buy which often do more harm than good. All of which they’re seemingly unwilling to confront.
Nowhere in Britain is the scale of the housing crisis more acute than it is in London. The government’s recent announcement of an end to the Housing Revenue Account (HRA) cap is welcome, but without the funding required to enable councils to meaningfully participate in the housing market again, public building will continue to be supressed. London needs 30,972 new low-cost rented houses a year – but despite the best efforts of the mayor and many local authorities, demand continues to far outstrip supply with just 7,905 of these houses completed in the last five years.
Surely then, in the face of increasing homelessness, the last thing that hard-pressed boroughs need is the ongoing legal requirement to sell off this precious public resource, at a discount of up to £108,000 per home, under the auspices of the Right to Buy scheme.
The ostensible aim of the Right to Buy was to increase rates of home ownership; but the reality is that this is in freefall, with Londoners and young people the worst affected. With an ever-greater proportion of former social homes falling into the hands of private landlords, the hard reality is that the Right to Buy isn’t only depriving councils of secure homes to offer to those in the greatest need – it’s also depriving so many more people of the security of tenure they rightly demand.
When I last investigated the impact of this policy in London in 2014, I found that at least 36 per cent of all homes sold by councils in London were being privately let. This week I published a new report, ‘Right to Buy: Wrong for London’, which takes a deep dive into the damaging legacy of this policy in the capital. The sobering reality is that the situation has worsened in the last five years – now an astonishing 42 per cent of former Right to Buy homes are owned by private landlords.
The picture in some boroughs is particularly grim. In Westminster, Harrow and Enfield more than half have fallen into the poorly-regulated private rented sector. Some landlords are building property empires out of what was once social housing: in Greenwich alone there are more than 200 individuals who own five or more former council homes.
With thousands of families across London stuck in temporary accommodation, it beggars belief that our boroughs are forced to line the pockets of private landlords simply to put a roof over people’s heads. Councils across London – already battered by almost a decade of austerity – shell out an astonishing £22m a year, at least, to rent back the very same homes that they were forced to sell at a discount. How can it be right that Newham, for instance, have little choice but to rent 808 of their former homes at a cost to the taxpayer of £12.9m a year?
The solution of course is to build thousands more homes for social rent. While City Hall has announced plans to fund the development of 11,000 more council homes in London, the government is failing to even replace those that have been lost under the Right to Buy scheme. The mayor of London’s new ‘ring-fence offer’ for London councils to protect their Right to Buy receipts is also a positive step. But in order to meet need, some councils are buying back homes they had previously sold under the Right to Buy, with Ealing Council spending £107m on reacquiring 516 homes they were forced to sell for just £16.2m.
It must be recognised that home ownership is important for many Londoners - but that should not come at any cost. The government needs to face facts, protect our capital’s housing stock and scrap the Right to Buy in London.