Offering £100,000 to housing association tenants to buy their homes is “plain bad policy” and “the worst idea yet” according to some experts. And in Croydon alone, it could cost the tax-payer £400 million. By STEVEN DOWNES
The spivocracy is back.
After yesterday’s publication of the Conservative Party manifesto, including Right-to-Buy MkII, you might half expect to see Chris Philp knocking on every housing association property’s door in Croydon between now and May 7, waving a £100,000 wad under the nose of the tenant.
In Croydon alone, where there are plans to build 8,000 homes over the next five years, that Tory bribe could cost the tax-payer up to £400 million. No surprise, then, that those working in the housing industry have ridiculed the Tory proposal as “unfair”, “the worst idea yet” and “plain bad policy”.
The extension of Right-to-Buy would do nothing to provide homes for the homeless, but it would do much to assist the profits of those whose businesses raise investment funds for developers. This would include people such as the millionaire Tory candidate in Croydon South, Chris Philp. It would also boost the bottom line for property owners such as the Whitgift Foundation – whose board of governors includes none other than Gavin Barwell, who is the Conservative candidate in Croydon Central.
Since Margaret Thatcher introduced Right-to-Buy after winning the 1979 General Election, the housing market in Britain has been skewed (or screwed?) on the supply-side, for the benefit of a few and the impoverishment of the many.
Councils were forced to sell off their council houses, which for decades had provided homes at low rents for hard-working families. Under Thatcher’s rules, councils had to sell the houses at massive discounts, another example of Tories transferring public assets to the private sector. And what money the councils received from the sales was never allowed to be reinvested in replacement social housing. Thatcher’s Right-to-Buy was in fact a charter for private landlords to get very rich, very quick.
This single graph, drawn up by the University of Sheffield earlier this year, illustrates how Right-to-Buy has impacted the housing market over the last three decades, with the reduction in building council homes under Labour as well as Conservative governments:
The graph only shows the rise and rise of house prices for purchasers. The rise in rents for those living in the private sector has been equally stratospheric.
In Addiscombe last month, one landlord was renting out a single room – no kitchen, no bathroom – for £900 per month. Elsewhere in south London, ex-council homes are being rented out by private landlords for £2,600 per month.
That the Tory announcement is nothing to do with solving the housing crisis and everything to do with a political bribe – using our own money – was demonstrated by one housing association official who claimed that with a single £70,000 Right-to-Buy subsidy on offer to one household on an estate outside London, he could build four new homes.
Using public cash to lure housing association tenants into private ownership is “deeply unfair”, according to the National Housing Federation. They said yesterday that housing association tenants “are people already living in good secure homes on some of the country’s cheapest rents … To use public assets to gift over £100,000 to someone already living in a good quality home is deeply unfair”.
What the Tories are really trying to do is ensure that investment in housing continues to be a hugely profitable one-way bet for the already rich and privileged.
It is surely more than mere coincidence, for instance, that multi-millionaire Charles Gow is a buy-to-let landlord who owns more than 40 former council flats. Gow just happens to be the son of Ian Gow, who was the Tory housing minister under Margaret Thatcher.
This routine transfer of public property to private interests is not, as the Tories would have you believe, about “aspiration”: at least three generations of young Britons have been consigned to a lifetime of being renters now, because property prices are so far beyond what they can ever hope to afford.
During the Thatcher era, 1.7 million council homes were sold off. More than one-third of these are now in the hands of private landlords like Charles Gow. This social housing has never been replaced, forcing ever more people into the shark-infested waters that is the private rented sector.
Under David Cameron’s leadership, the housing crisis has worsened, but his government just offered ever more generous discounts – with your money – on the sale of council houses: 17,205 more council homes have been sold off since 2010, but only 2,712 have been replaced. The proportion of people living in council housing has declined from 30 per cent in 1979 to 10 per cent today.
Local authorities, including Labour-run ones, have been suckered into the speculative development of their land, resulting in ever-fewer social homes, and ever-spiralling rents and house prices. In London, the feeling of social cleansing in some schemes has been intense. At Southwark’s Heygate Estate around 1,200 primarily social-rented homes have been replaced with 2,300 private flats and houses. Previous council tenants have been forced out when faced with an £380,000 asking price for a one-bed flat in their previously working class neighbourhood.
There are now 11 million private renters in Britain. “We are forced to rely on a largely unregulated, often rip-off sector to meet that basic human need, shelter,” Owen Jones, the left-wing commentator, wrote for The Guardian.
“We are disproportionately young, but the number of families unable to get social housing or own their own home in the sector has soared, leaving them paying high rents and often depriving their children of stability and security. Private renters spend on average about 30 per cent of their income on rent, but … in some boroughs, two-thirds of average incomes.
“In the early 1990s, nearly two-thirds of Britons aged between 25 and 34 owned their own home; it’s now down to less than 45 per cent.”
Recently, in Croydon, when the Labour group sought to introduce a licensing scheme for private landlords, in an attempt to improve tenancy conditions for the borough’s private renters, the likes of Barwell, Philp and their Tory colleagues at the Town Hall cried crocodile tears for their landlord mates, who would have to fork out a modest registration fee. It never takes much to uncover whose side the Tories are really on.
Andrew Fisher, the economist, writing for the Left Economics Advisory Panel, assessed the latest Tory manifesto offering thus: “It offers nothing for private tenants. In fact, private tenants are only mentioned once – and that is in the context of their landlord checking their immigration status. And of course, by cutting social housing, and keeping house prices out of reach, then more people will be living in private rented accommodation – and claiming more on housing benefit.
“…Those on low or middle incomes have no chance of saving the deposit for a home (which due to inflated house prices is considerably higher than ever before), and likewise little chance of ever getting the security of social housing.”
Fisher continues: “The reality is that right-to-buy has helped home ownership levels fall – along with other Tory policies including the deregulation of credit, rising inequality, explicit and implicit subsidies for buy-to-let landlords, and the removal of rent control in 1989. Home ownership levels today are lower than when Margaret Thatcher was defenestrated from office in 1991.”
So much for the Tory “aspirations” of home ownership.
Fisher recites the various policies which Cameron and his side-kick, Gideon Osborne, have pursued to keep house prices high. There have been record low levels of house building, with fewer than 150,000 homes built in each year of the ConDem coalition. Constraining supply is on page one of Gideon’s copy of Economics for Dummies as a means of keeping prices high. Add to that his mortgage subsidy, Help-to-Buy, and using our money he has worked at maintaining levels of demand, driving up prices ever more.
So the worsening housing crisis and the house price bubble are no accident: Cameron and Osborne have done their best to manufacture that situation, ensuring that investment in housing continues to be a one-way bet for their wealthy chums.
But this latest proposal on Right-to-Buy for housing association tenants is their worst idea yet. Who says so? None other than the chief executive of the National Housing Federation, David Orr.
He said: “As a measure to end the housing crisis, this is just about the worst idea yet.”
In common with many, Orr calls on central and local government to build more homes. “Any money we have should go to that task.” Orr says the money the Tories think they might spend on Right-to-Buy – around £17.5 billion over five years – is enough for housing associations to build more than 1 million homes for shared ownership. “That is a million households getting a foot on the housing ladder and a million new homes built. That, to me, is aspiration and ambition.”
The elephant in the room over the Right-to-Buy proposal is the simple issue of fairness. A private tenant in one property cannot access the Tory largesse to buy their home from their landlord, while their housing association neighbour next door will suddenly have their hands on a £100,000 discount. Orr says that private tenants “have no chance of becoming social tenants, and therefore no chance of benefiting from this bonanza.
“For a party that trades on being fair, this looks pretty unfair to me.”
Orr also nails the Tories on simple principle. They want to flog-off something which they do not own.
The housing association homes that the Conservatives want to sell belong to the housing associations, which are legally constituted as “Community Benefit Organisations”. According to Orr, housing associations are the most effective public/private partnerships in the history of the nation. “All this is put at risk,” Orr says. “This is plain bad policy.”
Orr writes: “They exist to provide benefit to the community and they hold their assets in trust for the community. They do this by providing affordable homes for rent. To dispose of these assets to individuals is contrary to their legal objectives. To force housing associations to do so would require new law. That would be a law where the government tells a private social enterprise what it can and can’t do with the assets it owns.
“Try putting Barnardos or Oxfam, or Hotel Chocolat or even Tescos into that sentence to see how ridiculous that is. Is this the party that wants to nationalise housing associations?”
It will be interesting to see how Barwell, a governor on the board of Croydon’s largest property owners, or Philp, who funds property developers, respond to those charges at their election hustings in the next three weeks.
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