UK's right-to-buy property purchase scheme 'has led to higher housing costs'

More than four in 10 council homes sold under the right to buy scheme are now being rented out by private landlords. Meanwhile, nearly two in five tenants in homes still eligible for right to buy live in poverty, making it unlikely they have the savings or income required to purchase their property.

The Resolution Foundation claims that rather than increase home ownership, for many low-income families the right to buy has instead led to higher housing costs via private rents.

More than 100,000 social homes sold off under Margaret Thatcher’s right to buy scheme have been lost to the private sector since 2015 and an increasing number are now being rented out privately. Figures from the New Economics Foundation revealed that 41% of council homes are now in private hands.

The UK government is clamping down on the right to buy policy but the think-tank warns that the country still has £50bn shortfall in affordable housing to address.

The government’s proposed changes to right to buy include tweaking the discount formula and increasing the number of years tenants must have lived in their homes to qualify for the scheme – from three to 10 years. The public consultation on these reforms closes this Wednesday.

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The Resolution Foundation estimates that these changes could make around 500,000 tenants ineligible to purchase their council homes under right to buy.

Figures show that only 11,000 council homes were sold under the scheme in 2022-23. The think-tank also points out that 62% of England’s remaining social housing stock is now owned by housing associations, which are not eligible for right to buy sales.

Moreover, with nearly two in five tenants in homes still eligible for Right to Buy living in poverty, it is unlikely they would have the financial means to buy their property even if they were eligible.

As the stock of social housing dwindles, calls have intensified for a suspension of Right to Buy, or at least a freeze on new sales until affordable housing levels are restored. The proportion of social renters has nearly halved, from 31% of English households in 1980 to just 16% in 2022/23, according to the English Housing Survey.

The Resolution Foundation argues that the proposal to exempt new-build homes from the right to buy scheme is crucial. This reform would help protect future social housing stock, particularly if the government meets its promise to increase social housing construction.

Cara Pacitti, senior economist at the Resolution Foundation, said: “Since its introduction, right to buy has helped over two million council tenants purchase their properties. But it has also worsened Britain’s affordable housing shortage. Instead of increasing homeownership among low-income families, it has often resulted in higher rents and greater wealth accumulation for private landlords."

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Pacitti added that, while new restrictions on right to buy would likely mark the policy’s end, there is still a pressing need to address the UK’s affordable housing deficit. She said that around 400,000 new homes need to be built, at an estimated cost of £50bn, just to return affordable housing stock to levels seen in 2010.

With the government having set a target of building 1.5 million new homes during this parliament, the Resolution Foundation notes that over one in four of these must be earmarked for sub-market rent in order to reverse the decline in affordable housing and meet the country’s housing needs.

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