Right to Buy will never be ‘sustainable’ – Labour must scrap the disastrous policy

At the Labour Party conference in September, Lisa Nandy told a fringe meeting that Right to Buy (RTB) was being reviewed. Yet on the Laura Kuensberg programme recently she said that she had always believed in the Right to Buy and Labour “supported the principle”. She added: “I agree with Michael Gove, actually, who said earlier this year that Right to Buy is sustainable if you replace homes like for like.”

There will be no one-for-one replacement. Even if councils could keep 100% of their receipts for sales, the cost of new build would not be covered by them because of rampant house price inflation. This is true even if a council uses its own land, which costs nothing. More so if it has to buy land to build on. How would the gap between receipts and the cost of new build be covered? It would have to come out of the rent of tenants, which is used for the upkeep of existing homes. More than 90% of housing revenue account income comes from tenants rent and service charges.

Even if it were possible to replace one for one, that would only produce a standstill in stock numbers when it’s clear that the housing crisis cannot be resolved without large scale council house building. Yet many councils are reluctant to build council homes when they can be sold off after three years.

A home sold is not only a home lost for the increasing numbers on the waiting list but it’s also lost revenue (the rental stream) as well. That means councils have less money to maintain and renew existing stock. Housing revenue accounts already have insufficient income to replace key components of their existing homes (bathrooms, kitchens, central heating etc). One reason is that they are burdened with so-called debt (‘creative accounting’ by the Treasury), which costs around £1.4bn a year to service. Lost revenue from RTB sales makes the shortfall of funding worse.

With RTB sales at more than 10,000 a year in England and demolitions usually 2,000 plus, councils would have to build 12,000 or more a year just to replace the lost homes. They haven’t built that many since 1990. As a result of RTB (and stock transfers) there are now less than 1.6 million council homes in England available. Only around 80,000 new tenancies were given out last year. There are nearly 1.2 million households on waiting lists, although this gives a false impression of the scale of need. Since the Tories gave councils the ability to tighten their criteria, numbers have been manipulated downwards. Some councils have told their tenants that there is no point being on the list because of the shortage of available homes and other ruses, such as having to reapply to stay on the list, have been used to reduce the numbers. Need is far greater than the 1.2 million figure suggests.

We have previously written on why RTB needs to be ended, as it has been in Scotland and Wales. Ending RTB is cost-free. Stopping the loss of stock would mean that, for the first time since the policy was introduced, every new home built would increase the homes available for those on housing waiting lists. This would open up the prospect of beginning to reduce the number of households on the lists.

In light of Lisa Nandy’s comments at conference – about the policy being reviewed – the Labour Campaign for Council Housing issued a statement calling on Labour to commit to ending RTB. Lisa’s recent comments highlight the need for party members and organisations to remind the leadership that resolutions passed at the 2019 and 2021 conferences called for an end to RTB. They were overwhelmingly passed. We are calling on Labour members and organisations to sign our statement. We want to get across the message to the leadership that ending RTB is a precondition for resolving the housing crisis. To sign it email us at [email protected].

At the 2021 conference, Lucy Powell (then responsible for housing) said that ending RTB was necessary and it was what the members wanted. When we met shadow housing minister Matthew Pennycook earlier in the year, whilst he did not commit to ending RTB, he did say that the loss of homes needed to be stemmed. The best way to do that is to end RTB. Labour should do what the members want and commit to ending this disastrous policy – a policy that is one of the main causes of the housing crisis we face.

RTB will never be “sustainable”. It undermines efforts to step up a council house building programme. It will continue to be an obstacle to ending the stigma attached to council housing because of the presumption that home ownership is superior to renting, that everybody should ‘aspire’ to owning a home – and that if you don’t you lack aspiration. When we face a dire economic situation in which many people’s aspirations are to be able to afford to turn on the heating, to be able to feed their children and eat, home ownership is not on their horizon.

As for the generation forced into the expensive and often poor quality private rented sector, ending RTB would open up the prospect of increasing council housing stock. Combined with funding a large-scale building programme, it would offer the possibility of liberating the new generation from the private sector. The possibility of a secure council tenancy with ‘social rent’ would certainly be something for them to aspire to, and enable them to escape from the insecurity of the private sector.