“With five million households in the private rented sector, often in poor living conditions, the acute shortage of council housing means they are trapped.”
By Martin Wicks, Labour Campaign for Council Housing
In defending her support for Right to Buy (RTB) Lisa Nandy recently said that “telling working class people they can’t own their own home is just unacceptable”. If she meant their council home, that rather contradicts what she said at last September’s Labour conference; “the idea of a home for life handed on in common ownership to future generations is an idea worth fighting for.”
If a council home is sold to the tenant then it ceases to be “in common ownership”. It is one less home available for those on the waiting list when the tenant leaves or dies.
Nobody opposes working class people owning a home. But it shouldn’t be a council home. Whilst buying one on the cheap obviously benefits the individual tenant, it has dire social consequences, as the 1.2 million households on the waiting list and more than 100,000 in temporary accommodation show. Moreover, an estimated 40% of ex-council homes end up in the exploitative private rental market.
Lisa Nandy has spoken about “like for like” replacement of homes sold but we have yet to have an explanation of how this would be accomplished. With sales nearly 11,000 last year, and demolitions needing to be taken into account as well, councils would have to build 13,000 or more each year just to stop the loss of stock.
Talk to councillors responsible for housing and they will look in disbelief at how “like for like” replacement is supposed to be achieved. The Local Government Association (LGA) has long asked for councils to be able to keep 100% of receipts. Yet in a Sunday Times interview with Lisa we read that the Labour leadership is considering giving receipts to (as yet non-existent) development corporations rather than allowing councils to keep them all. Why propose this if you want councils to build more council housing?
We have been told by senior Labour figures that they are concerned that if they commit to ending RTB the Tories will accuse them of “opposing aspiration”. Yet it’s not difficult to challenge this argument. RTB has been disastrous, a key driver of the housing crisis. When a home is sold a council loses threefold.
- It has one less property for those on the growing waiting lists. In 2021/22 only 51,000 council homes were let to new tenants.
- It loses the rental income. By our reckoning, over the last 10 years alone English councils have lost roughly £480 million in rental income. As their losses stack up, year on year, especially with inflation so high, then unit costs of maintaining and renewing the falling number of existing properties increase. RTB is also a disincentive to councils to build. Why spend time and money building new stock only to lose it through RTB?
- On average councils lose 41% of the value of properties sold. The discount is lost by councils. The government does not compensate them. Over the last 10 years the discounts add up to nearly £6.9 billion lost by councils. They do not even keep what the tenant pays for buying the property. The government takes a cut which is supposed to be associated with historic debt. This is despite the fact that in 2012 when a new financial system was introduced, there was a “final debt settlement” which was said to enable councils to “buy themselves out” of the centralised system. 136 councils were given more than £13 billion bogus debt which they are still servicing, to the extent of around £1.3 billion a year.
With five million households in the private rented sector, often in poor living conditions, the acute shortage of council housing means they are trapped. The younger generation in particular, many in precarious work, laden with debt from their education, will not be able to afford a mortgage. Interest rate increases have made them even more unaffordable.
We would contend that it is unacceptable to force people into the market because of the shortage of council housing. The secure tenancy of a council home has much to recommend it. Would that the dream of a council tenancy could become a reality for many more people than currently stand a chance.
Not wanting to own a home, or not being able to afford one, is not an expression of lack of aspiration. The reality of the lives of too many people today is that their aspirations are to be able to pay the rent without a struggle, to feed their children and themselves, to be able to turn the heating on when it’s cold, and to live in a home which is not a threat to their health. That’s why building social rent homes should be the first priority.
Historically, council housing facilitated home ownership insofar as the reasonable rents enabled tenants to save up for a deposit for a market home, hand the keys back to the council, and the property was handed onto a household on the waiting list. It could facilitate that again if building/buying was on a large scale once again.
However, it’s also necessary to say that there is nothing superior about owning a home rather than renting. Keir Starmer is wrong when he says that home ownership “is the bedrock of security and aspiration”. As mortgagees who have to renew their mortgages are now finding, to their cost, increasing interest rates can drive you to the financial edge. A mortgage can become the proverbial albatross around the neck.
The great benefit of a council tenancy, as opposed to the private rented sector, or even a housing association home, is that you have a “secure tenancy”. It’s not automatically “a home for life”. If you don’t behave in a civilised fashion or you don’t pay your rent then you can lose the tenancy. However, it can be a home for life, and the security that tenants have means that it is their home, and most tenants treat it as such, even though they don’t own it.
End Right to Buy and fund large scale council house building and for the first time since 1980 the prospect will be opened of increasing stock and liberating people from the private sector. With a big battle over funding likely if Labour is in office, one advantage of ending RTB is that it is a cost-free policy.
At the 2019 and 2021 conferences the membership and affiliates voted overwhelmingly in support of ending it. Our campaign has a model resolution on housing for this year’s conference which includes committing a Labour government to ending RTB. It’s high time for England to follow Scotland and Wales in ending the privatisation of collectively owned housing. We will be calling on conference delegates to vote for housing as number one priority in the priorities ballot to ensure that it is on the agenda of the conference for discussion. Ending RTB is a necessary step towards resolving the housing crisis.
- Martin Wicks is the Secretary of the Labour Campaign for Council Housing. You can follow them on Facebook and twitter; and follow Martin on Twitter here.
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