CROYDON IN CRISIS: The council does not have enough homes to house the homeless. But the Labour government created a ‘gold-rush’ torrent of applications for Right to Buy that may have forced the transfer into private ownership of every council flat ever built by Brick by Brick
There’s a reason there is a housing crisis: Thatcherism and the Right to Buy. And according to one report this week, Keir Starmer and his Chancellor, Rachel Reeves – you know, the “former Bank of England economist” – appear to have just made an already bad situation worse. Much worse.
Selling out: Margaret Thatcher, accompanied by Tory GLC leader Horace Cutler, handing over keys to a council house in 1980
Shouldering the brunt of yet another significant financial hit will be the country’s hard-pressed local authorities, again. Including cash-strapped Croydon Council.
Research published in The Guardian shows that so far this financial year councils in London have already received 3.5 times more Right to Buy applications than they received in the whole of last year, as people scrambled to grab a last, juicy slice of what has been described as Thatcher’s “single biggest privatisation”.
Right to Buy was the flagship policy of Thatcherism. Images from almost half a century ago of Prime Minister Thatcher sitting having a cup of tea in the kitchen of what had overnight become an ex-council flat, or handing over the keys to a family “taking the first step on the housing ladder”, have by today acquired an almost sepia tint to them.
But those images represent something that has proved to be the most powerful political vote-winner for decades, images so strong that neither Tony Blair nor Gordon Brown would take action to sweep away Right to Buy.
Right to Buy allows tenants of homes built and owned by the public to buy them at a massive discount. Launched in 1980, within seven years, more than 1million council-owned homes had been flogged off, often at massive discounts, with councils also facing financial restrictions on how they replaced their housing stock (local authorities continued to have a legal duty to provide homes for the homeless). And the policy remains in force today.
Homes, sweet homes: rented accommodation in London is unaffordable for most people – but there is not enough truly affordable council housing available
Three generations of working-class families, traditional, loyal Labour voters, tens of thousands of them living on the council estates of England, have been swung to vote Tory often because of Right to Buy.
But among the first acts of Keir Starmer’s Labour government was to slash the discount available to council tenants wanting to buy their homes. In London, instead of a discount on a council property of as much as £136,400, since November, the Right to Buy discount available has been reduced to £16,000.
“It’s a good move, squeezing demand and all but choking Thatcher’s policy to death,” wrote The Guardian’s senior economics commentator, Aditya Chakrabortty.
But Starmer and Reeves’ move has had unintended consequences.
Chakrabortty FoI’d all 32 London boroughs, including Croydon, and uncovered what he called a “deluge” of RtB applications from council tenants eager to cash-in before the discount deadline of November 21.
Chakrabortty, pictured right, wrote, “Whether north or south of the river, inner city or outer suburb, the pattern is unmistakable and stark. Battered by years of cuts, besieged by the spending pressures local authorities now face, as I heard on phone call after phone call, there has been ‘an explosion’ in applications; a ‘staggering’ number of bids; ‘unprecedented’ demand.”
At Southwark Council, the city’s biggest council landlord, they were forced to hire extra staff to cope with the additional work created by the 1,300 RtB bids they received in the weeks before the discount deadline. The “blizzard of paperwork”, as Chakrabortty describes it, is “low-level chaos”, with “a good proportion of dodgy or flawed bids, and no certainty at all about how many council homes are flogged off at the end of it all”.
The end-result of this rush by council tenants to grab a massive, state-funded discount as they join the ranks of property-owners is that huge swathes of council homes will pass into private hands. In some boroughs, as many council homes could be flogged off as the total they have built in 25 years. In Southwark, over the years they reckon that they have lost 16,000 homes to Right to Buy, half of which are now rented out on the private market, with landlords raking in rental income that is often subsidised by housing benefit…
It’s the grift that keeps on grifting.
Chakrabortty calls it “Thatcher’s hangover”: “Public money was spent on building those homes; public money was lost through giving them away cheap; and public money is now funnelled in housing benefit to the landlords who let them out…
“… Property owning? For some, but for others try: property flipping, property renting, property accumulating – done on the cheap with taxpayers’ cash. While the private sector keeps raking it in, the public sector is deprived of rental income and forced into ever more desperate measures to house tenants.”
And by giving council tenants four months’ notice of the reduction in RtB discounts, Starmer’s government unwittingly made a bad situation very much worse.
Made a bad situation worse: Prime Minister Starmer and his former Bank of England economist Chancellor created a rush for Right to Buy discounts
Chakrobortty did not publish his findings for Croydon, but he very kindly shared them with our columnist, Andrew Fisher.
Here in cash-strapped Croydon, with “toxic” debts of £1.4billion, the notion that the rush for RtB discounts may have created “low-level chaos” at Fisher’s Folly is probably well-founded.
According to its response to Chakrobortty’s FoI request, Croydon Council had received the following number of applications for Right to Buy over the last five years:
2020-2021: 264
2021-2022: 291
2022-2023: 212
2023-2024: 167
2024-2025: 793
That’s a 470% increase in Right to Buy applications received by Croydon Council between 2023-2024 and the first eight months of the current financial year. In the past five years, Croydon has never approved more than 86 RtB applications in a single year.
Month-by-month last year, those Right to Buy applications were received by Croydon Council thus:
Apr: 14
May: 22
Jun: 15
Jul: 24
Aug: 11
Sep: 27
Oct: 34
Nov: 646
Dec: 0
That’s a 19-times increase in applications between October and November last year.
Croydon Council has refused Inside Croydon’s FoI requests for the number of council homes it has built over recent years. We were asking for specific information to try to show how many had been delivered by Brick by Brick, the wholly-owned council development company which was devised as a means of getting around Right to Buy, but which eventually bankrupted the borough, after having borrowed £200million and never making a penny profit.
As part of its Brick by Brick project, in 2018 Croydon received grants, from central government and the Greater London Authority, of £61million towards the construction of nearly 1,000 council homes.
Figures obtained by Chakrabortty from the Ministry of Housing, Communities and Local Government show that, seven years later, Croydon has actually delivered barely 40% of the council homes it had promised.
2016-2017: 3
2017-2018: 3
2018-2019: 2
2019-2020: 36
2020-2021: 58
2021-2022: 291
2022-2023: 31
2023-2024: 14
The 291 homes delivered in 2021-2022, too late to save the council from financial collapse, are the consequence of the winding up of Brick by Brick, from late-running projects such as Flyover Towers (Kindred House). Figures for the current financial year, when available, may include Red Clover Gardens, five blocks of flats on a former car park in Coulsdon, the final development by Brick by Brick to be completed and then sold off.
Starkly, the most worrying thing of all is that the Right to Buy applications received by cash-strapped Croydon just in November 2024 could see pass into private ownership, on the cheap, every single one of the council homes built in this borough throughout the period of Brick by Brick, in the latest triumph for political incompetence.
And Croydon, a council that cannot house its homeless except at huge cost through using B&Bs and private landlords, has just gone cap-in-hand to the MHCLG for its now-annual bail-out, this year with the ask of a staggering £136million. That’s a helluva hangover we’ve been left by Thatcher, and Starmer.
Read more: London Mayor steps in with £53.8m grant for Regina Road
Read more: Council sells off public green space to Brick by Brick for just £1
Read more: Council set to take £100m hit as it winds down Brick by Brick
Read more: Conflicts of interest, incomplete contracts, unlawful payments
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Since 1981 Council Housing has reduced by over 12,500 properties in Croydon due to RTB if that had not happened we would not have the current waiting list of aprox 7,000 and we would not be left with only 13,400 homes. Add into this the discount given and loss of rent revenue Government must cease RTB for both councils and Housing Associations
Since Thatcher introduced right-to-buy, London has lost half of its Council owned homes.
Meanwhile the number of empty homes continues to rise.
We need to reverse this and the Government needs to give Councils the money to start buying up homes to house the homeless
Good point, but are you sure councils are the right people, to build homes? How could we trust Croydon after the BXB fiasco?
There is an obvious need for homes available at social rent (not unaffordable “affordable hones” under any other formula). The provider is irrelevant, though as councils have a statutory obligation to provide housing…
The LCC, GLC and Lindon boroughs all provided such in the mid-20th Century, as did the Peabody and Guinness trusts and Church Commissioners.
Provide homes at social rent in volume, and the bottom drops out of the private rental market. Supply and demand is put into a fresh balance.
And the profiteers, rapacious landlords and property developers are inconvenienced. What a shame