Right to Buy sales will slow to a crawl under the Government’s proposals – but Britain still has £50 billion shortfall in affordable housing to address 15 January 2025 The Government’s proposed clampdown on the Right to Buy council homes will significantly blunt the impact of the policy. But it still faces a huge task in replenishing Britain’s affordable housing stock – with 400,000 more properties needed, at a cost of £50 billion, just to get back to 2010 levels of sub-market rent homes, according to new research published today (Wednesday). The Foundation’s latest Housing Outlook examines the likely impact of the Government’s proposed legislation on the Right to Buy (RtB) – which has enabled over two million tenants to buy their properties since the policy was introduced in 1980 – and where it has left Britain’s affordable housing stock. The report notes that the RtB was abolished in Scotland and Wales in 2016 and 2019 respectively, while proposed legislation – for which a consultation closes today – will further limit its impact on England. Changes include tweaking the discount formula, and increasing the numbers of years tenants must have lived in their home to qualify from three up to ten years. As a result, around 500,000 fewer tenants would be currently eligible to buy their own council homes. In practice however, the Foundation says that RtB purchases have already fallen to just 11,000 in 2022-23. 62 per cent of England’s remaining social housing stock is owned by housing associations, and therefore not eligible for the original RtB scheme. And with nearly two in five tenants in homes that are still eligible for RtB living in poverty, it’s unlikely that they have the savings or income required to purchase their property. The author says that the proposal to exempt new-build homes from the RtB is much more important to future-proof the social housing stock from the dramatic sell-offs of the 1980s, particularly if the building of social housing increases as the government has promised. The Right to Buy has been a divisive policy. While popular among tenants and politicians, the policy has contributed to a decline in the UK’s affordable housing stock, which has fallen from a peak 5.5 million in the 1970s to just 4.1 million today, despite huge population growth over this period. And while the policy is supposed to boost home ownership, Freedom of Information requests have found that over 40 per cent of homes purchased under the scheme have ended up in the hands of private landlords. Rather than increase home ownership, for many low-income families the policy has instead led to higher housing costs via private rents. The Housing Outlook notes while the Government’s legislation will effectively mark the end of RtB, the job of replenishing Britain’s affordable housing stock has only just begun. It finds that 125,000 more social homes would be needed to just to clear the backlog of families in temporary accommodation in England – at a cost of around £15 billion. If, however, the Government wanted to return the UK’s affordable housing stock back to the level when it was last in power, an additional 400,000 homes would be needed – at a cost of £50 billion. With the Government having set a target of building 1.5 million new homes over the Parliament, over one-in-four of these would need to be built for sub-market rent to get Britain’s affordable housing stock back to where it was in 2010. The Foundation says that with the Chancellor set to announce in the upcoming Spending Review in June how she intends to spend an additional £100 billion of capital investment over the Parliament, building more affordable homes should be a major part of the Government’s plans. Cara Pacitti, Senior Economist at the Resolution Foundation, said: “Since its introduction in 1980, the Right to Buy has helped over two million council tenants to buy their properties. But it has also worsened Britain’s affordable housing shortage. And rather than boost home ownership among low-income families, too often it has instead boosted the portfolios of private landlords. “New restrictions being proposed by the Government will effectively mark the end of Right to Buy. But the job of replenishing Britain’s affordable housing stock has only just begun. Around 400,000 homes need to be built – at a cost of £50 billion – just to get levels of affordable housing back to where they were when Labour was last in Government.” Notes to Editors The most recent Freedom of Information requests on RtB sales were compiled by the New Economics Foundation, and published in this report.
