Right to Buy reforms announced, but warnings it could lead to social housing shortage

Housing association tenants will now be able to buy their homes and will be able to put their housing benefits towards mortgages, under reforms to the Right to Buy Bill. 

Prime Minister Boris Johnson believes the scheme, originally developed under Magarte Thatcher, will permit up to 2.5 million tenants to buy their homes at discounted rates. 

The government has also agreed to commit to building replacement homes for each one sold, while an independent review into access to mortgage finance for first-time buyers will also take place.

This is to reduce the growing housing crisis in the UK which has left just 6% of renters able to access a mortgage, despite 50% of people being able to afford one.  

The Prime Minister said: ‘We have a ludicrous situation whereby plenty of younger people could afford to make monthly mortgage payments – they’re earning enough to cover astronomical rent bills – but the ever-spiralling price of a house or flat has so inflated deposit requirements that saving even just 10 per cent is a wholly unrealistic proposition for them.

‘First-time buyers are trying to hit a continually moving target. And of course the global rise in the cost of living is only making life harder for savers. So we want it to be easier to get a mortgage.’

But there are concerns the government will not be able to replace social housing quikcly enough to meet demand, as experienced by housing association Stonewater during a Right to Buy pilot in the Midlands.

Nicholas Harris, Chief Executive at Stonewater, said: ‘We are in the middle of a cost-of-living crisis with people facing a choice between heating or eating. Extending the Right to Buy will diminish the supply of affordable homes available to hard-pressed families. I question whether this policy is the right use of scarce resources at this time when it won’t provide additional homes for the people that need them most.

‘It is encouraging to hear the government commitment today that homes sold will be replaced like-for-like. In the Midlands pilot, we were able to replace homes 1:1.65. But this relied on us using Stonewater resources to build modern, affordable homes and not necessarily where they were sold. Without sufficient government funding it will be virtually impossible to build replacements and increase the overall supply of affordable homes as needed.’

The head of London estate agent Benham and Reeves, Marc von Grundherr, echoed these worries and said previous attempts to allow social tenants to buy their homes have backfired.

He said: ‘We’ve seen how previous initiatives allowing social tenants to purchase their properties has backfired, as it causes a significant shortage of stock for those most desperately in need of help, while also driving up property values in the process. 

‘Of course, this time around it will be different, as they pledge to replace these purchased properties on a one for one basis. Unfortunately, if you believe that, you may also believe that the drunken shenanigans that took place at Downing Street during the pandemic really were innocent, work related events. 

‘The Government’s record of delivering new homes is woeful at best and social housing has long been an area of serious neglect. To allow them to auction off existing housing association stock while also failing miserably to replace it would be a big mistake indeed.’

Photo by Mark Stuckey