Tuesday, 14 April 2015

Is the right-to-buy a bad thing?

The housing world is frothing with vituperative arguments - and quite rightly so - at the launch of the Conservative Party manifesto today and the pledge to extend the right-to-buy to housing association homes. Now, we all know that the original right-to-buy was a Bad Thing. I don't disagree with this assessment that wildly: it reduced the supply of affordable rented homes; it led to the residualisation of social housing as a tenure of last resort; and it led to spatial segregation as the best housing was bought at substantial discount and was now out-of-reach of many lower income households. Finally, and for me most problematically, it left local authorities with an enormous burden of historic debt and no income stream to pay it off. I'm on the board of a housing association with properties with the preserved right-to-buy and I see the impact of this once-in-a-while when one of these properties is purchased and our balance sheet takes a small hit. The mess that local authority housing revenue accounts were left in by the right-to-buy doesn't bear thinking about.

But, was the right-to-buy a Bad Thing in its entirety? I'd say we need some caution and nuance here - and we can end up with a much more radical policy. First of all, to be clear, the right-to-buy was not an invention of the Thatcher government. Local authorities since the 1950s had been building homes for purchase. In Tucker's cracking book Honourable Estates he gives the example of local authorities where you knew the Conservatives, or "Progressives" had won the local election because the "To Let" signs on the shiny new homes they'd built were replaced by "For Sale" signs. My uncle and aunt bought such a property, built by the LCC with a cheap mortgage through the Public Works Loan Board, in Harold Wood in Essex in the 1960s. Further, I can't put my finger on a source for this just right now, but as I understand it the right-to-buy in this format was extended in the 1970s. But the key here is an implementation detail - under these schemes the debt that the local authority had incurred through the construction was paid off by the purchaser. The discounts that have left local authorities strapped for cash since 1981 were not in place.

Further, in my research, and I've spoken to others who have found the same, in deprived neighbourhoods the right-to-buy is actually quite important for long-term residents in two ways. Firstly, it means that if their family wish to remain close by, but become homeowners, they can purchase property, often resold RTB properties. Secondly, for many long-term, committed residents people exercising the RTB is a very positive symbol - it means that their neighbourhood is now good enough that people are willing to invest a substantial amount of their money in property. Of course, the stigma towards such neighbourhoods should not be there in the first place and is exacerbated by the RTB and associated residualisation, but this is where we are and I cannot discount the evidence from the interviewees in my research. Also, that the RTB is being scrapped in Scotland has led to a surge in people taking advantage of it does suggest it's still a popular policy with individual tenants.

So, if we dare to say the RTB is not necessarily a Bad Thing what do we do about it? Well, from a more radical but pragmatic standpoint, I'd say we should do two things: firstly, the discount should be properly calculated as that bit of debt remaining, once maintenance costs have been factored in through depreciation, that the housing authority still has. This might actually mean the RTB is removed from some properties as this is incalculable. Secondly, if individuals can have the right to take property of one institution, then they should have the right to take it off all institutions - that is the RTB should be extended to the tenants in all private property. As the infamous (on twitter) loveandgarbage pointed out, the only person to do this was a (very) Conservative Secretary of State for Scotland in 1997.

This, for me, is the more radical way to deal with the RTB and would also open up new, exciting forms of property ownership in a collective way if tenants in blocks of flats could collectively exercise the RTB. But, of course, as Alex Marsh has excellently exposed, the Conservative policy for the RTB is not thought-free. It is radical, but it is radical in terms of an attack on the neediest in society. It is a radical attack on the state and the idea that some people might be dependent on others for help. It is not a radical way to change housing policy or delivering new social housing. But then, that is also why the Conservatives are proposing to change inheritance tax making wealth even more poorly taxed in the UK. But that's a whole other blog post.

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