The Council Housing Sell-Off Disaster
Forty years ago, there were five million council houses in England, lived in by three out of ten families. Since then the number has declined by two-thirds. The Housing and Planning Bill, which returns to the Commons this week, will make it even more difficult for anyoneeither to get a council home or to keep it once they do.
Councils will be forced to sell off higher-value properties that could have been let to people on their waiting lists. Most of the money will go to the Treasury. It's nominally aimed at funding thenew right to buy for housing association tenants, but it now looks likely that the'higher value' threshold will be set so low that the sales will create enough money to fund other policies, too, such as the programme to build 'starter homes' for first-time buyers. According to Shelter, 'the only group it appears to help on a significant scale will be those already earning high salaries who should be able to afford on the open market without government assistance.'
Councils are supposed to replace the homes they sell off, but even if they are able to do so there are likely to be delays of four to five years and a permanent fall in the number of new lettings,already at record low levels. The replacements will have higher rents or could even be for sale. Among the council tenants whose houses will be forceably sold off are pensioners and disabled peoplewho need council-owned bungalows. They usually have higher values and, because they take up more land, are harder to replace.
Anyone who does manage to get a council tenancy will also get a much worse deal. The bill removes the security of tenure which (after a trial period) means tenants can only be evicted for goodreason, such as seriously annoying the neighbours or not paying the rent. The new bill means that tenancies will end automatically after a fixed period. Households earning more than £30,000 (or £40,000 in London) will pay much higher rents. The extra money will go not to councils but to the Treasury. By selling off better properties and making it harder for tenants to stay in those that remain, the government will make council housing much less attractive. More tenants will be tempted by the right to buy. If properties that are sold are later bought by private landlords, they’ll command rents that are at least double those charged by councils.
The government is also forcing councils to cut their rents every year until 2020. This is promoted as a saving to tenants, but the biggest saving is the Treasury’s, in lower benefit costs. It willbe devastating for councils’ finances, and could lead to the cancelling of building plans for more than 18,000 new homes.
Four years ago, council housing became self-financing. Councils paid £7 billion to the Treasury in return for being able to keep all their rent revenue for themselves. Grant Shapps, then thehousing minister, promised that the arrangement would ‘endure for the long term’. But the government immediately started to undermine the deal: it raised the discount that tenants can get if theybuy their house to over £100,000 in London, and cut the qualifying tenancy period to three years; it brought in welfare reforms like the bedroom tax that mean more tenants trying to move and many having difficulty paying their rents. By the time the bill was published, many councils had already started to pay off their debts rather than borrow more money to build new homes.
Self-financing was supposed to give council housing some of the independence enjoyed by housing associations. But the bill will reinforce the differences, encouraging associations to cater for better-off tenants and leaving councils to house those who have no choice. Council housing could eventually be reduced to a mere ambulance service, as it is in the US and Canada, rescuing people in desperate need, putting them in flats that no one wants to buy and quickly moving them on.
Is this a calculated strategy or is the government simply blundering into it? Officials have admitted to the Public Accounts Committee that they didn’t look into the effects of the sales policy, cost it or test different options. Meg Hillier MP, the committee’s chair, criticised the government's 'vague assertions': 'We are not talking about a "back of an envelope" calculation – there is no envelope at all.'
Read more in the London Review of Books