The right time to change right-to-buy?

By Cabinet Member for Homes and Neighbourhoods, Cllr Sharon Thompson

A report was recently commissioned by Local Government Association which looks at the impact of the current Right-to-Buy (RTB) policy on councils’ ability to replace homes. Following this, I wanted to take the opportunity to talk about the effect of Right-to-Buy, here in Birmingham.

The policy which, was introduced in England in 1980, is designed to help those, who otherwise wouldn’t be able to get on to the housing ladder, into home-ownership. The policy has ensured that 55,000 families and individuals have found the comfort, safety and happiness that home ownership brings by purchasing their properties. Undoubtedly we need to endeavour to make sure that this continues to be a possibility. However, the UK is in the midst of arguably the worst housing crisis since the Victorian era and reform is essential.

Current policy means that councils are only allowed to keep some of the receipt from RTB and therefore cannot replace homes on a one-for-one basis. According to the report, around 12,224 homes were sold under RTB last year. With the money that this receipt returns, it estimates that in 2023, councils would only be able to replace approximately 2,000 of these.

Birmingham City Council (BCC) currently has slightly over 61,000 properties. However, more than 1300 of these homes have been sold in the last two years, since the launch of RTB, and the scheme’s only increasing in popularity.

So, what’s the impact of this?

The impact of councils’ only being able to keep one third of the RTB receipts is that they are unable to replace these affordable homes in the areas which are needed by local communities. As more homes are sold, they end up leaving social housing stock and join the private-rented sector. This means that we in the council have to approach the problem with a degree of innovation.

The Birmingham Municipal Housing Trust (BMHT) was created due to diminishing council stock, increasing demand for affordable housing and private developers building unsuitable accommodation for social housing. While BMHT has been able to build 331 homes, in the same period when 600 properties have been sold under RTB, 210 properties have been demolished due to their unsuitability and a further 350 properties have been sold via BCC’s wholly-owned company InReach.

These figures demonstrate the unsustainable reality of RTB. While the aims and motivations for RTB are exactly what we should be working towards, if the current housing stock trends continue, RTB will inevitably have to end as we run out of housing.

The big picture

As our housing stock continues to decrease, it has a broader impact. Birmingham currently has over 10,000 people on the housing register, a further 3,000 people who are in temporary accommodation and 57 people that were identified in the last rough sleeper count in December.

Here at the Council, we will be working with our partners across the city to do all that we can to prevent homelessness. However, brave and drastic changes are needed to help address these issues. While positive steps can be seen in the government’s approach to ending homelessness with pilots like Housing First, for which the West Midlands received £10 million, it doesn’t address the need for more affordable housing being built.

If we were able to retain a higher value of the RTB receipts rather than these going to the Treasury, councils would stand a better chance of building the homes that they need. This means homes being built in the areas where they are required and to the specifications which are in highest demand. For example, often 3, 4 and 5 bed houses are the most common type of property required by those on the housing register. However, this is not the housing being built by private developers.

Without significant reform to RTB and the way in which it is funded, council housing stock will soon be significantly diminished as we cannot replace housing stock on a one-for-one basis. We would urge Government to consider a localised scheme so that councils can assess housing need against the stock available.


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