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Selling Off Public and Social Housing
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The Right to Buy has had a massive impact on Housing in the UK for 35 years and in 2015 there were proposals to extend it. But what is the Right to Buy policy, how has it developed and what has its impact been? What evidence is there about the wider and unintended consequences of the policy? How are the proposals to extend the policy in England likely to affect future housing provision and what alternatives are there?

In The Right to Buy, Alan Murie provides an authoritative account of the origins, development and impact of the policy across the UK and proposals for its extension in England (and decisions to end it in Scotland and Wales). Presenting up-to-date statistical material the book engages with debates about transfers to private renting, the impact on public expenditure and on the current housing situation, addresses the proposals for new legislation and details the potential impact of these. It is an essential read for anyone interested in this highly topical issue.

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The Right to Buy, providing most council tenants with the right to purchase the house they lived in, was to become the most significant privatisation of all those introduced by the Thatcher government. The Right to Buy was regarded by the government as having been a vote winner, and was introduced as part of a package of policies that broke the long established pattern of support for both council housing and home ownership. It was variously regarded as providing neo-Conservative (supporting the family and promoting stability) or neoliberal (increasing reliance on markets) alternatives to the mixed economy of welfare that had operated in the housing sector. It brought the era of management of a housing system with substantial collective ownership to an end – replaced by a market-based deregulated system of housing finance and private renting and subsidised home ownership. This book argues that the Right to Buy and the wider housing policy package was an experiment in the sense that it sufficiently broke policy continuity, and that its impact was uncertain. There were beliefs that, if councils reduced their housing activity, private actors would flourish and fill the gap, and increasing home ownership would improve decisions about what was built, maintenance and repair and use of the housing stock. But there was no hard evidence to support these beliefs. Indeed, the failure of the market to provide enough appropriate housing, when and where it was needed, partly explained why council housing had developed such a significant role in the UK.

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While the Right to Buy reduced the council housing stock, housing associations were sheltered from it and, from the mid-1980s, became the government’s preferred vehicle for new rented housing. Housing associations also expanded rapidly through stock transfers stimulated by private finance and public policy, and by 2015 they provided more housing in England than local authorities. Very large housing associations have emerged with approaches to management, merger and business planning that reflected a belief in economies of scale. Some had lost the distinctiveness associated with their histories and where and why they initially operated. In 2015, however, there were proposals to extend the Right to Buy to housing associations in England.

In the lead-up to the 2015 general election there were a series of press stories about Conservative Party ideas for electorally attractive policies, and plans to further extend the Right to Buy in England. Conservative governments since the mid-1980s had favoured housing associations (rather than local authorities) as the vehicles to provide new rented housing, promote low cost home ownership and manage rented housing: private finance, regulation that gave comfort to private lenders and government grants supported the growth of housing associations. By 2015 however the leadership of the Conservative Party had moved away from this position and had become highly critical of housing associations. The origins of this shift in position are not entirely clear but seem to have been stimulated by contributions through the new generation of political think tanks seeking to influence government rather than objectively assess evidence.

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This chapter draws on available statistics to indicate activity under the Right to Buy and its impact. More than 2.8 million council and social rented dwellings were sold in the UK under the Right to Buy between 1980 and 2015, generating more than £58 billion in capital receipts for government. The Right to Buy changed the size, nature and location of public and social rented housing across the UK, and contributed to a significant change in the overall tenure structure.

The government has provided statistics on council house sales since before 1980, but there are problems over changing definitions and practices. Some data are for financial and some for calendar years. Some refer to a narrow definition of sales carried out under the Right to Buy, and others to all sales to sitting tenants. Regional data for England ceased to be compiled after 2011. Local variations in rates of sale are difficult to present for local authorities that transferred any significant part of their stock. Consequently, this chapter does not provide a comprehensive or definitive statistical account, and aims to provide sufficient statistics to present a reliable picture that highlights key aspects of the Right to Buy.

Table 4.1 presents data for the annual sales of dwellings in England, Scotland, Wales and Northern Ireland by councils, new towns and housing associations. These data refer to Right to Buy Sales and its equivalent in Northern Ireland, and exclude other sales of existing social housing. They indicate almost 2.7 million sales in the UK between 1980 and 2015.

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The Right to Buy was initially advantageous to long established tenants who had no plans to move, but as the policy matured and discounts increased, the properties sold and the tenants buying changed – more purchasers had shorter tenancy histories and bought in order to move home. While the decision to buy proved beneficial for most purchasers, the advantages gained varied according to when and where people bought. The risks associated with changing health, employment and relationships could also lead to arrears and repossessions. Right to Buy buyers were more likely than buyers generally to be in insecure occupations and to experience difficulties with mortgages, in spite of the financial buffer provided by generous discounts. And the problems experienced with defective and unmortgageable properties and related to leasehold sales were only partly addressed by policy measures.

The longer-term effects are critically about whether Right to Buy properties remain owner-occupied once their original tenant purchasers move on. Do the properties remain in home ownership (housing first-time buyers or existing homeowners)? Or are properties transferred to other tenures, in which case the expansion of home ownership was temporary? What are the implications for how the policy worked in strategic and public expenditure terms? The loss of relets, failure to reinvest capital receipts in replacement housing, the benefit costs associated with transfers to private renting, issues about the condition of the housing stock sold under the Right to Buy and the impact at an estate level all connect with current housing problems and policies, access to housing and the use and targeting of public funds.

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This chapter outlines the origins of public sector housing and its critical role in the improvement of housing supply and housing conditions in in the UK after 1919. It grew to house almost one in every three households in the UK, and this made the potential reach of privatisation considerable. The chapter also outlines debates and the development of policy and practice in selling council properties before the introduction of the Right to Buy in 1980 – and suggests that these helped shape the direction of subsequent housing privatisation.

The origins of public housing in the UK are rooted in 19th-century legislation, but before the introduction of Exchequer subsidies in 1919, few municipal dwellings had been built. Accounts of public health and housing policy before 1919 refer to a plethora of legislation, but little council housebuilding. Merrett (1979, pp 19-20) refers to three legislative periods leading up to 1914. In the first (1851-75) it became possible for local authorities to build lodging houses within which accommodation was communal. In the second period (1875-90) powers to build council housing were used, but the costs of compensation and construction presented too great a challenge to most councils. It was in the third period, from 1890 onwards, that most municipal dwellings were built, before 1914.

The Housing of the Working Classes Act 1890 provided the legislative basis for the development of council housing, and the Housing and Town Planning Act 1909 enabled local councils to declare town planning schemes related to specific areas of new development and provided powers that facilitated the building of council dwellings.

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The Right to Buy marked a significant change of approach to housing in the UK. It was followed by a period in which the role of councils in shaping local housing declined along with council housing. After 35 years, it is now possible to offer a verdict on the success of the Right to Buy experiment. The policy rewarded one generation of tenants, and made a real difference for most of these households. Some 2 million Right to Buy sales between 1980 and 2015 increased the level of home ownership. While this could be seen as evidence of success, the incentives associated with the policy and the context in which it operated meant it would have been surprising had this not been achieved. A longer-term evaluation would refer to the failure to sustain home ownership at a higher level – the Right to Buy expanded home ownership temporarily through extraordinary discounts that were only available once for each property, and a significant proportion of these properties were transferred to other tenures on resale.

Without measures to reinvest the capital receipts from Right to Buy sales, housing shortages had also become a major concern across the UK by 2016. New construction remained much lower than before 1980, and fell far short of what was needed to meet demographic change, let alone rising aspirations. There was growing evidence of unhealthy and inappropriate housing, alongside inflation of house prices at the top of the market. The Right to Buy forms part of the explanation for more severe housing problems, and the common reference to a housing crisis.

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The year 2015 marked 35 years since the introduction of the Right to Buy – a flagship policy of Prime Minister Margaret Thatcher’s government elected in 1979, and the most significant and lucrative act of privatisation associated with that or subsequent UK governments. The policy gave almost all tenants of public sector landlords the ‘right to buy’ their dwelling, and resulted in the sale of some 2 million dwellings in the UK between 1980 and 2015. In the same period, new additions to the stock of social rented housing fell far short of the volume of sales, and housing provided by local authorities and housing associations declined significantly.

The Right to Buy was always controversial, but media and other accounts focused on the successes – the stories of tenants who had bought their houses and the popularity of the policy. The government marketed the policy and periodically reinvented it to reassert its merits and to revive public interest. Reservations about the policy and its cumulative effects were more cautiously expressed, and for a long time arguments that the funds generated by selling houses should be reinvested in housing to ensure that future generations could obtain good quality, affordable housing were ignored.

There were no steps to reinvest capital receipts from council house sales in social housing before 1997 when concerns about value for money also began to inform policy modifications across the UK. Further changes followed to limit and then abolish the Right to Buy in Scotland and Wales, but in England, after 2010, the policy was revived and relaunched with increased incentives to buy, and also after 2012, with commitments to replace sold council houses on a one-for-one basis.

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This chapter discusses how inequalities can be ended in the area of housing. While housing is not at the top of New Labour’s policy agenda, it has been identified as affecting outcomes in health and education, as well as having an important role in improving employability. The discussion examines how housing is a product and contributory factor in determining inequality, and focuses on how housing issues, such as poor housing conditions, homelessness, and the residualised social-housing sector, are linked to the wider processes of social exclusion. It presents a critical analysis of New Labour’s focus on the worst estates and suggests that the focus of social exclusion in terms of the social-housing sector is being made at the expense of housing problems elsewhere.

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