The built-in rip-off
Ross Clark
Onepolicy above all is credited with winning the 1979 general election for the Conservatives: the right to buy. Britain in the 1970s was a country where the majority still lived in council housing and few aspired to leave the estates on which they grew up. Thirty years later, television schedules are filled Monday to Sunday with programmes about eager home-owners improving and profiting from their properties.
In the Housing Bill announced in last week's Queen's Speech, the government announced plans to curtail the right to buy. In future, tenants will have to have lived in their council homes for five years before they can qualify to buy them, rather than two as at present. From now on, they will have to live in the property for at least a further five years before they escape having to repay some of the discount they enjoyed when buying the home; at present it is necessary to live in the home for just another three years.
The Conservatives will huff and puff over this measure, accusing the government of destroying the dream of would-be home-owners. A year ago, in a desperate populist gesture, lain Duncan Smith committed the party to extending the right to buy to all housingassociation tenants. This is not just wrong: it stands somewhat ill at ease with the Conservatives' shrill opposition to the Scottish Land Reform Act, which grants crofters the right to buy. Far from trying to recreate their glories of the early 1980s, the Conservatives should trump the government by promising to abolish the right to buy altogether.
The right to buy was a good policy in 1979 because it was necessary to bring about a one-off social change. It introduced the concept of self-improvement to a generation of workers who had always looked to the state to solve their problems. But a quarter of a century on, the right to buy has become as much an anachronism as the council house itself. It is contributing horribly to house-price inflation, hindering the redevelopment of problem estates and creating drastic labour shortages that are threatening to undermine the quality of life in wealthy parts of the country. The right to buy is no longer teaching self-reliance; it is merely encouraging council tenants to rip off the taxpayer. Under current rules, council tenants wanting to buy their homes are granted a £38,000 discount relative to market value. Why should they get this handout at the expense of taxpayers who have always made their own housing arrangements?
Worse, who qualifies for these £38,000 handouts is in the gift of those localauthority officials whose job it is to allot tenancies. The right to buy has become an open invitation to corruption.
If the right to buy was supposed to eradicate sink housing estates, it has failed horribly. On the contrary, it is helping to perpetuate them. Take the Ocean Estate in Stepney, a grim collection of tower blocks which the borough of Tower Hamlets has been trying to demolish. As soon as it announced its redevelopment plans, however, dozens of tenants suddenly exercised the right to buy. While they get their flats at a £38.000 discount, the borough will be forced to buy back the flats at full market value in order to demolish the blocks, plus pay a 10 per cent relocation allowance to the tenants who are displaced.
It is not the only way in which the right to buy is ripping off the taxpayer. While the stock of council housing is falling rapidly — the number of 'social housing units' fell by 35,000 in 2001 as 53,000 were sold off and only 18,000 new ones built — the right to buy is doing little to reduce the number of homeless people councils are obliged to accommodate. The result is that councils are having to look to the private rental market in order to house the homeless. Many of the homes that councils end up having to rent turn out to be former council properties now in the hands of private landlords. These landlords find they can charge councils far higher sums than it used to cost councils to provide their own social housing. Renting ex-council houses back to councils has become such a profitable enterprise that investors have started pushing leaflets through tenants' doors, offering to finance the tenants' right to buy on the condition that the tenants sell the property on to the investor as soon as the rules permit them to do so.
In the early 1980s. it was a common experience to hear your plumber boasting that he had just bought his council house. Nowadays, in central London and other wealthy districts it is a job finding a plumber at ail. The right to buy has helped to inflate house prices and forced wouldbe home-buyers of modest means out of the market. What limited council housing and housing-association stock remains in many areas tends not to go to plumbers, car mechanics and firemen but to recovering glue-sniffers, economically inactive single mothers and asylum-seekers who are forbidden to work while their applications are being processed. The skilled manual workers who benefited so much in the early years of the right to buy are frozen out of buying or renting in wealthy areas, much to the harm of the local economy. The right to buy helped Mrs Thatcher to win three elections and retains a special place in the affections of the Right. That shouldn't prevent anybody from saying that it has become a dinosaur of a policy that should be slain forthwith.
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