Right to Buy purchases have cost taxpayers virtually £200bn in discounted gross sales over the past 5 many years and contributed to the nation’s housing disaster, in accordance to a brand new report.
Right to Buy was one among former Prime Minister Margaret Thatcher’s “most iconic and consequential insurance policies”, says the thinktank Common Wealth, which since 1980/81, has seen 1.9 million council houses in England offered to tenants at a median low cost of 44% of market worth, incomes money receipts of over £51bn.
The coverage was key to the Conservative Party’s claims that the UK was turning into a “property-owning democracy”.
The examine comes as Deputy Prime Minister and housing minister Angela Rayner has pledged to construct extra inexpensive houses and reduce on Right to Buy gross sales.
The thinktank’s report says these former council houses at the moment are price an estimated £430bn (at 2024 costs) after taking account of inflation and the surge in property costs since 1980.
Of this sum, the thinktank provides that £194bn represents the worth that was “successfully given away without cost by the low cost”.
The report factors out that this switch of wealth from the state to homebuyers has had two main penalties.
It says: “First, is a worsening of the housing disaster — by the collapse in social housebuilding — and its marriage ceremony to market forces by way of personal cross-subsidy –, councils’ incapability to reply to native housing want and the pivot from subsidising provide to subsidising demand.”
The second has been “a weakening of council stability sheets, rendering them particularly fragile when the onslaught of austerity started in 2010”.
The thinktank says the quantity of “housing fairness given away from free” is now price 1.6 instances the remaining inventory inside England native authorities’ Housing Revenue Account — valued at round £122bn in 2022, and greater than double the sum of all internet liabilities within the type of debt securities and loans throughout native authorities, put at £92bn as in December 2024.
“Financially talking, the general public sector was, in our view, incorrect to promote such a quantity of property at such discounts, on condition that the unsustainable dynamics of asset value inflation,” says the report referred to as, Wrong to Sell: How Right to Buy gave away billions in public wealth.
Last month, Rayner (who purchased a house as a Right to Buy tenant) set out plans to construct round 300,000 inexpensive houses with the £39bn of funding she secured from the June spending overview.
The Deputy Prime Minister added that at the very least 60% of those houses can be for social lease, linked to native incomes, which might imply delivering round 180,000 houses for social lease. This determine is six instances increased than the last decade up to 2024.
Rayner additionally plans to place more durable restrictions on Right to Buy gross sales in a bid to preserve council housing shares, together with extending the minimal time a council tenant should reside of their dwelling from three to 10 years earlier than they’ll purchase it at a reduction.
