Government accused of “stealing” Right to Buy cash from local councils

Campaigners have accused the government of effectively “stealing” money raised by the sale of council houses under Right to Buy from local authorities ahead of changes diverting the funds away from building social homes.

Commenting after ministers confirmed last week that receipts from the scheme can be used for shared ownership and First Homes properties from April 1st, the Labour Campaign for Council Housing has called for councils to reject the policy.

“Council housing revenue accounts have been ‘ring-fenced’ within a council’s general fund since 1990,” secretary Martin Wicks said this morning.

“The ring-fence means that council tax cannot be used to support council housing and tenants’ rent cannot be used to support non-housing services. What the government is proposing is in practice a breach of the ‘ring-fence’.

“Use of Right to Buy receipts to build replacement council homes for those sold, provides rental income which pays for maintenance and renewal of council housing stock. To use them to subsidise home ownership instead, means the council loses the home and the rent.

“Housing revenue accounts have insufficient funds to maintain existing homes and renew key housing components, over the long term. Using Right to Buy receipts to subsidise home ownership will only make the funding shortage worse.

“Use of Right to Buy receipts for shared ownership and First Homes will be discretionary. Councils which support council housing should make a public commitment that they will only use Right to Buy receipts for council housing.

“Supporters of council housing should be pressing councils that own council housing stock to make this commitment whatever their political colour. Pressure should be brought to bear to make the proposal a dead letter, until it can be withdrawn.”

Under the changes, local authorities will from April be able to use the funds raised by Right to Buy sales to finance schemes to help people buying houses, which are generally targeted at people on higher incomes.

Housing and homelessness campaigners have criticised the move and warned it will make the housing crisis worse and lengthen council waiting lists. Shelter chief executive Polly Neate described it as a “step in the wrong direction”.

“We are already selling off more social homes than we build every year,” she said. “Now the money from these sales will be funnelled into home ownership schemes that are far out of reach for average renting families, rather than building more of the secure and affordable social homes we so desperately need.”

According to the Local Government Association, 89,294 homes were sold under Right to Buy in the eight years between 2012 and 2020. Councils have only been able to replace around a third, 27,856, of these homes sold in the same period.