The Welsh government has begun the process which they hope will lead to the abolishment of right to buy in Wales. This will mean that council tenants in Wales will no longer have the right to buy their property at the traditional discounted rates. It could take some time to push this bill through the Welsh assembly and then there would likely be a cooling off period before the changes were introduced. So, is the Welsh government right to end right to buy?
Social housing stock
If you look at social housing across Wales, purely from a financial point of view, very quickly it becomes obvious it is not working. Councils are currently offering tenants the right to buy their property at a discount to the market rate while under pressure to build new social housing. Effectively, councils are selling properties which are required, losing money on their value, and then being forced to build brand-new homes.
Figures released by the Welsh government suggest that since 1980 when the scheme was introduced there has been a 45% reduction in Welsh social housing stock with 139,000 tenants using the right to buy scheme. While this may not necessarily make a big difference to a larger area of the UK such as England it has made a significant impact on the Welsh social housing sector.
Is this simply common sense?
With the UK government offering an array of financial assistance to those looking to buy properties in recent times it does seem bizarre that councils across the UK are still offering tenants the right to buy, at a discount to the market rate. It has to be said that this policy did indeed bring about a major change in the UK property market which moved from a rental market to homeowners market – under Margaret Thatcher’s government.
Governments right across the UK have been punished by austerity measures introduced by Westminster and need to make as many savings as possible. It makes perfect sense that the Welsh government would rather retain social housing stock than effectively sell it off on the cheap. Whether this will have a material impact on the worsening situation in the Welsh social housing sector remains to be seen.
Human rights legislation
Many will be surprised to learn that under human rights legislation the Welsh government could in theory pass this bill relatively quickly but they would need to wait at least one year to introduce the changes. That is because they need to give current tenants the option to acquire their properties under the old right to buy rules before they can change them.
The problem for some people has been property investors using this route to acquire social housing stock and then simply rent out in the private sector. However, at the end of the day buy to let investors are not breaking any laws, they are providing a service but at this moment in time it seems fashionable to bash property investors.
Conclusion
It makes perfect sense for the Welsh government to try and close the right to buy scheme which has seen 139,000 council houses sold off since 1980. A 45% reduction in social housing stock needs to be replenished and this is perhaps the first move to steady the ship. Will any other areas of the UK follow suit?