RIGHT TO BUY: HOME TRUTHS

Taken from Big Issue in the North magazine 

Right to buy given to social housing tenants 

Market rents may force some out of their home 

Government plans to extend the right to buy for tenants of social housing have been widely criticised. 

Social housing consists of homes provided by councils, housing associations and registered social landlords. 

Nearly a fifth of Britain’s homes are social housing, and demand for it remains high, with 1.8 million households on waiting lists. 

Giving tenants the right to buy was a flagship policy of the Thatcher government and maintained by subsequent administrations. It resulted in a large reduction in council housing stock. 

Although the full details have yet to be revealed, David Cameron’s government now aims to extend the current right-to-buy discounts for council tenants, which start at 35 per cent after a tenant has been in a house for three years, to housing association tenants. During the general election campaign, Cameron claimed the policy showed the Conservatives were the party of “working people, offering you security at every stage of life”. 

Housing associations will also see their income drop after they were instructed to reduce rents by 1 per cent annually for the next four years. The government has told councils they must sell their most valuable properties to fund the new right-to-buy discounts. And from 2017 social housing tenants will be forced to pay market rents to remain in their homes if their annual household income exceeds £40,000 in London and £30,000 elsewhere. 

Barry Faulkner from Liverpool is among those set to be affected. He moved to Pyrford Village near Woking – not classed as part of London – to live with his partner and her severely disabled daughter, aged 10, who requires constant attention. They live in a specially adapted three bedroom council house that they rent from Woking Borough Council at £545 a month. 

‘Entire income’ 

Faulkner earns over £30,000, his partner has a £61 a week carers allowance and the family also has funding for  a vehicle with a lift in the back. Market rents locally for similar properties are a monthly minimum of £1,800 and average £2,000. 

“There is no way we can afford to pay anything like such sums, which are equivalent to my entire income,” said Faulkner.

“I may have to move out as clearly we cannot disrupt where my partner’s daughter lives because it is specially adapted for her needs. 

“We are hoping for some form of remit around disability and a heavily tapered rent increase based on income. Better still if the policy was scrapped.” 

Chancellor George Osborne announced in the budget a new £9 an hour national living wage from 2020. This will mean that a couple living outside London and both working 34 hours a week would be classified as higher income and liable for the market rent. Any surplus from a market rent must be paid back to central government by councils. 

These plans are set alongside the freezing for the next four years of working- age benefits, as well as the cap on benefits that can be claimed by a family to £20,000 outside London. This will cut the incomes of many families in social housing and may threaten their ability to meet their basic needs. 

‘Administrative nightmare’ 

Yorkshire Housing (YH) is a registered social landlord providing more than 18,000 homes. YH’s social rent tenants in a typical two bed property in Halifax pay just over £350 a month rent – around a third less than local market rents. YH also builds homes for sale on the open market and rents out homes at market rates. 

A YH spokesperson said it was “concerned” about charging higher rents to tenants earning over £30,000 “as we have no mechanism
to know what tenants earn, feel it will affect only a small number and may prove an administrative nightmare costing more than it generates in extra rent”. 

YH is waiting to see if it will be paid full compensation by the government when tenants buy their homes at a discounted rate. 

“Whilst supporting tenants’ home ownership aspirations we don’t want it to undermine our housing association business model as we want to continue providing good quality affordable rental housing for those who need it,” continued the spokesperson, adding that rent reductions would cut its income and hit reinvestment. 

According to the National Housing Federation, which represents housing associations, nationally they will lose £3.9 billion under the policy. In some cases tenants may find it cheaper to buy the property rather than paying market rents, further depleting social housing stock. 

Roberta Blackman-Woods, MP for Durham City and shadow housing minister, said charging market rents for households with incomes above £30,000 could prove a “disincentive to people to work more hours or secure promotion”. 

She added: “Also extending right to buy to housing associations risks making the housing crisis worse. Housing experts have criticised the plans as unworkable and uncosted and, according to the Office for Budget Responsibility, they risk adding £60 billion to public debt. 

“The government does not understand the scale of the housing crisis and their policies will deepen, not ease, it.” 

Radically different 

Despite the concerns of many experts and tenants, NHF chief executive David Orr said: “Given the scale of the housing crisis it is understandable that the government is looking for higher earners to pay what they can afford for housing. Housing associations would like to work with the government on its plans... and can do much more to help people, including our own tenants, into home ownership.” 

The NHF’s A Plan for Homes aims to build 120,000 homes annually – half for sale and half for letting at market or affordable rent levels. “Affordable homes” is a relatively recent housing term that is increasingly replacing social rent, where rents would be set at around half local market rents. Affordable rents are set at 80 per cent of the local market rent. 

A radically different approach is offered by Defend Council Housing (DCH), which argues for direct public investment in council housing with lower rents and secure tenancies. 

DCH spokesperson Eileen Short claimed the introduction of market rents and right to buy were designed to force people into buying, whether or not they could afford it. 

“It will line the government’s pockets while destroying social housing by reducing it to housing of last resort – just when millions are in desperate need of secure and really affordable homes to rent,” she said. “We will be fighting to put council housing back where it belongs, as
part of the answer to Britain’s growing housing crisis.