Cllr David Renard is the Leader of Swindon Council.
Since the 1980s, the Right to Buy (RTB) policy has enabled thousands of families to get on the housing ladder who would otherwise not have had the opportunity. This is a Conservative policy that has stood the test of time and has proved increasingly popular, especially in recent times as discounts have increased. Larger discounts are obviously positive for the prospective homeowners, but it means councils are left with too little finance to replace those homes – and that is even with the latest announcement that councils can retain 100 per cent of the remaining income from sales. This policy change is welcome although, for many years, councils were only able to retain 25 per cent and, more recently, 50 per cent of the proceeds. Under this financial model, local councils have been tasked with replacing these RTBs on a one-for-one basis which has proved impossible to achieve.
Current projections are that the 100,000 homes likely to be sold under RTB by 2030 will be replaced by only 43,000. Not only does this mean that councils have fewer properties to allocate for social housing but also that there will be fewer properties available in the future for the next generation to get on to the property ladder through RTB. This is causing councils difficulties for two reasons. Firstly, councils need a larger stock of social housing in order to accommodate not only those currently on the housing waiting lists but also finding homes for those who have arrived from places such as Ukraine and Afghanistan.
The cost of placing these families in a shrinking private rental sector is costing the taxpayer far more than it would to place them in the social sector. Private rents have soared as supply has diminished which is costing Government and councils more to secure tenancies. Additionally, the Local Housing Allowance (LHA) has not kept pace with the market to the extent that now only three per cent of properties for private rent are covered by the LHA. Secondly, the current receipts from RTB fund 40 per cent of the build cost with the remaining 60 per cent having to be borrowed. Although the latest announcements improve this position, significant borrowing is still required to achieve replacements on a one-to-one basis.
To address these challenges, councils need to be given the ability to set RTB discounts locally to avoid the continued loss of desperately needed social housing stock. Different parts of the country see different house prices, demand for social housing, and costs associated with building a replacement home, so a national policy leaves councils with no choice but to hand out significant discounts, which severely impedes their ability to deliver replacement homes.
Councils might, for example, choose to offer an RTB discount on a more proportionate and balanced basis based on the amount of rent paid by tenants, more akin to a rent-to-buy model, rather than the current blanket availability of the RTB at high discounts. Starting minimum discounts at a lower rate to reflect the amount of time that a tenant has rented the property (or for newer properties since the property has been built) has the potential to offer improved value for money and is also entirely consistent with the original concept from the 1980s that the discount represents the amount of rent paid by a household in their time in the tenancy.
Reform is needed urgently on RTB to ensure that we can deliver our Conservative values of securing best value for the taxpayer, ensuring more people can get on the housing ladder, and also providing for those who are most vulnerable.