UK, The desperate councils buying back homes they were forced to sell
With housing waiting lists higher than ever, eviction rates rocketing and stock dwindling through right to buy and the impending compulsory sale of high value housing, some councils have resorted to desperate measures.
Freedom of information requests by Inside Housing show that of the £1bn raised since 2012 to replace right to buy, £27.3m of it has been used to buy back homes sold under right to buy.
The government encourages the sale of council houses by offering attractive discounts to tenants, who understandably choose to buy. The council is then faced with dwindling stocks while waiting lists lengthen and homelessness spikes. So it uses its cash to buy back the homes it could not afford to lose in the first place.
If you’re not angry, you should be – it’s a damaging policy that uses Treasury cash to gift people cut-price homes, only to buy them back at full price.
The government is using your money to make other people richer
Since 2013, the government has boosted discounts on right-to-buy homes in London to £103,400, and £77,900 in the rest of England. Proponents argue it gives “hard-working families” – that hackneyed old Tory mantra that increases in meaninglessness with every tiresome utterance – a nudge on to the property ladder. Opponents point out that a select committee report last week found that 40% of former council homes sold through right to buy are now rented out by private landlords.
For a government so in thrall to market forces, it seems keen to artificially nudge them when it comes to housing. And selling government assets at below-market prices is not the only Conservative scheme that highlights the madness of the housing crisis. Help to buy, which gives new homeowners an initially interest-free government-backed equity loan to buy a home, has artificially inflated the housing market, according to research by the Independent .
Calling the scheme “Willy Wonka economics”, property agent Henry Pryor told the paper: “If you give 10 people extra money to be able to afford to buy five properties, at the end of it all you get is five more expensive properties and five people who still can’t afford a house.” The scheme has been most readily adopted in the east of England, where house prices are rocketing. Purporting to be a lifeline to locked out homeowners, it is simply propping up a market that even the Bank of England accepts is overheating.
But if people are buying homes, through right to buy or help to buy, shouldn’t we just bite our tongues and be grateful, rather than griping? No, for one simple reason.
The government is using your money to make other people richer. When councils buy back right-to-buy properties from private landlords, they get richer. When help to buy boosts prices on new properties, developers get richer. At the other end of the spectrum, people on housing waiting lists, renting from private landlords, and trying to buy their first home, get poorer. That’s a huge section of society impoverished to differing degrees purely to stop a collapse in profits for very wealthy investors and landlords. Is it worth it? No. Is it sustainable? No.
The Conservatives are running scared that a housing crash could lose them votes. Right to buy and help to buy are not long term solutions to the crisis – they’re the equivalent of dosing up on caffeine when you’re exhausted but desperately need to keep working.
But if you carry on knocking back espressos forever, you crash; eventually an overheated market will too.