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RTB won't sprinkle magic dust on threadbare housing policy

In yet another announcement by leak the Government has let serious media outlets (well, today’s Sunday Express and the Star) know that David Cameron will tomorrow announce a further increase in the maximum discount available for the right to buy (RTB), from the £50,000 announced before Xmas to £75,000. It appears the new discounts will come into effect almost immediately.
From the look of the spin, the RTB is once again to become the totemic policy showing that the Government is serious about promoting home ownership – when in reality owner occupation continues to decline and they have no policy to deal with that at all. Grant Shapps is quoted as saying ‘This coalition government backs the dreams of those who want to own the roof over their own head’.  Have you noticed how he increasingly speaks in tweet-length soundbites?
There have been over 2 million RTB sales since 1980 but discussion about its real effects are normally clouded by rhetoric, rather like Shapps today accusing Labour of cutting discounts ‘vindictively’ and not being to ‘stomach people aspiring to own’. The latter point is of course aggravating to those of us who think that Labour has been overly obsessed with home ownership at the expense of a balanced housing policy.
It is the case that in many places the RTB enabled tenants who wished to become home owners to stay in their existing home and neighbourhood, and this has had some benefits in terms of community stability. It also demonstrated that council estates were often great places to live and that local people were willing to invest in them.
Many people have continued to live happily in the homes they bought. But the downside impacts of the policy have been huge:

  • It led to a long term and disastrous reduction in the number of council homes becoming available to let;
  • The most attractive homes were sold disproportionately, including many houses with gardens and ground floor flats, diminishing the prospects of families and people with mobility difficulties getting the type of home they needed.
  • Some people were simply encouraged into debt they couldn’t manage – RTB owners are far more likely to be repossessed and many did not take into account their liability for ongoing service charges;
  • Some genuine purchasers were not aware of the long term liabilities they were taking on and have been faced with ruinous bills for block improvements and the remedying of defects;
  • The Treasury took most of the capital receipts so there was little replacement of the rented homes sold;
  • Many owners in high value areas, and especially in London, sold the property on to make a substantial capital gain, often to a new breed of private landlord and leading to a new generation of private tenants on estates – the cause of growing management problems.

According to the Express, Cameron and Shapps will claim that: ‘New home buyers will have the satisfaction of knowing that for each property sold, we will be aiming to replace it with a new affordable home’.
In addition to the unjustifiable sale of assets at hugely discounted prices, non-replacement has indeed been the biggest single criticism of the RTB scheme since the start. These two factors lead some people to benefit at the expense of others. The people who benefit have a voice – the Tory party and the bulk of the media – but the people who disbenefit normally don’t even know why their housing options have reduced.
Shapps’ claims about ‘one for one’ replacement are cynical and a sleight of hand. True, increased sales will generate additional capital receipts, so there will be some additional resource that could be put into new homes. But – especially with an increased maximum discount – the amount will nowhere near fund ‘one for one’ replacement. The impact assessment makes clear that other resources will be needed, and these should already be committed to housing provision.
The Express and the Star, and also the BBC, which picked up the story, do not point out that when the Government talks about replacement with new affordable homes it means the misnamed ‘affordable rent’ product at rents that might be twice as high as social rents. So, as we pointed out in a previous post, ‘it’s not ‘one for one’ and it’s definitely not ‘like for like’ ‘.
Labour’s position on the RTB – supporting it in principle but with only modest discounts – is still the right one. The Tories are hoping that the RTB will again sprinkle magic dust over their threadbare housing policy and take attention away from their failures in housebuilding and homelessness.  My assessment is that the RTB has lost the extraordinary political impact it once had.  So I hope, probably in vain, that our great British media will look beyond the cuddly rhetoric about home ownership and ask Cameron and Shapps some proper questions about the real impact of their diversionary scheme.
Update – Also reported in the Sun online – very interesting demographic these leaks have been targeted at.  But Sun a long way wide of the mark to say ‘The cash raised from sales will be spent building new council houses’ !!