The Housing Crisis Once More

According to new estimates from the Local Government Association (LGA), 66,000 council homes in England will be sold to tenants under the Government’s Right to Buy scheme. Because local councils only receive one third of the cash from Right to Buy purchases, they will not have the money to replace the lost social housing, the LGA said. In fact, council finances are in such a dire state that they will be forced to sell a further 22,000 council properties – a forecast of 88,000 homes to be lost by end of decade. The number of council houses has dropped from 5million in 1981 to 1.7million in 2014. More and more people are being driven into the private rental centre, leading to a £210m increase in the housing benefit bill.

The independent Chartered Institute of Housing (CIH) also voiced concern that measures in the new Housing and Planning Bill, which is currently being debated by the House of Lords, would make it “very difficult” for councils to build homes and warned that its own research indicated that extending Right to Buy to housing associations could lead to the loss of an additional 7,000 council homes a year which may not be replaced.

The Right to Buy scheme helps council and housing association tenants in England buy their home with a discount of up to £103,900, or £77,900 outside London. The policy hits council budgets for house-building, which will also be affected by a proposed £2.2bn reduction in social housing rents. The LGA is calling for 100 per cent of the receipts from Right to Buy sale to go to councils. Currently, they only get one third, with much of the remainder going to the Treasury.

The Government pledged to build 200,000 starter homes for people entering the property market, but the LGA’s housing spokesman, said ministers needed to recognise that “not everyone can afford to buy”. He said  “With 68,000 people currently living in temporary accommodation, annual homelessness spending of at least £330 million and more than a million more on council waiting lists, it is clear that only an increase of all types of housing – including those for affordable or social rent – will solve our housing crisis. This loss of social rented housing risks pushing more families into the private rented sector, driving up housing benefit spending and rents and making it more difficult for families to save the deposit needed for their first house.” Discounts offered to buyers of the 200,000 starter homes have a knock-on effect on the social housing sector, LGA experts said, because it is funded by allowing developers off the hook on their obligations to fund affordable housing. Research by Savills estate agents has shown that the average first time buyer now requires a deposit more than double their annual income to get onto the housing ladder.