London’s councils spend £22m a year renting back homes they used to own. It’s time to scrap Right To Buy

Some flats. Image: London.

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.

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.