Yesterday at the Conservative Party conference Theresa May opened a very interesting debate regarding social housing. Initially there was great anticipation at the prospect of billions of pounds being made available to local councils to increase their social housing stock. This would catch the attention on those voters centre-left. Then there was the prospect of selling off new social housing after 10 to 15 years to raise funds for local authority/governments in the future and give tenants the right to buy. This would catch the attention on those voters centre-right. However, are we now in danger of going back to the 1980s and repeating the same mistakes again?
Why is social housing stock often sold off?
When you bear in mind the billions of pounds which have been invested in social housing over the years, why do we often see this stock being sold to tenants under right to buy schemes? Local authorities have fought tooth and nail to find land, to build properties and to reduce the length of their social housing waiting list, only to sell these properties from under the noses of the electorate. Why?
There is no doubt that many homeowners today would have struggled to climb onto the property ladder if it had not been for the right to buy scheme back in the 1980s. The scheme is still valid in many parts of the UK but it was the 1980s which led to a massive boom in homeownership across the country. As the UK population continues to blossom, demand for social housing continues to grow it looks as though we are headed for a repeat of the 1980s.
Selling below market price
One element of the right to buy scheme which has annoyed many taxpayers over the years is the fact that these properties are routinely sold below the market value. In the past there have been a variety of different discounts available to tenants in effect handing them an immediate profit on their right to buy purchase. That is not to say homeowners have simply sold up and downsized but, over the years, local authorities across the UK must have given back hundreds of millions of pounds to previous tenants. Is that fair?
When you bear in mind the age of social housing schemes across the UK it is fair to say that many, even sold sub market value, would have crystallised a paper profit for local authorities. That is not justifying or defending the “giveaway” but in theory this does raise new funds to build yet more social housing. The fact that this did not materialise, and is probably unlikely to materialise in this forthcoming cycle, is another debate. The terms of the Conservative Party social housing policy of the future are yet to be revealed and there is particular interest in how funding lines will be opened for local authorities and what interest rate they will pay.
In theory the idea of building relatively cheap social housing, selling it off in 10 to 15 years and banking a profit to bankroll more social housing in the future is not necessarily a bad one. It is the redirecting of funds to different areas of local authority budgets which has caused problems, left social housing in the UK in perhaps the worst situation for a generation and now at the forefront of political battles between the Conservative Party and the “government elect” in the shape of Jeremy Corbyn. Can we trust any politicians to do what is best for the electorate?