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The Green attack on home ownership

    The Green run council in Brighton and Hove has voted to apply for an exemption from the Right to Buy policy. As I argued on the Today programme on Radio 4 this week with Bill Randall, the Chair of the Housing Committee of the council, this would be a terribly misguided policy which would strike a blow to home ownership. 

    Owning your own home is the aspiration of the great majority of people and the sense of security and belonging that it provides should not be underestimated. Home ownership allows people to build permanent roots in the community and makes it easier for them invest in and think about their properties in the long term. Most people who are renting (whether privately or socially) are not doing so out of choice but because buying a house is unfeasibly expensive.

    The Right to Buy scheme which gives tenants the freedom to buy their council houses along with a discount on the price has proven to be a powerful tool in boosting home ownership. The impact on demand for social housing is minimal because both the house and the family move from the socially rented sector into the private sector. Councils also collect 30% of the sale revenue with which to build new houses and between July and September this year, they collected £210 million from Right to Buy sales; a 17% increase on the year before.

    In 2011/12, there were only 2,638 Right to Buy sales however there has been a clear rejuvenation of the policy since the Government increased the discount in 2012. In 2013/14, there were 11,261 sales and in the 3rd quarter of this year alone there were 2,845 sales. In Brighton and Hove, the number of Right to Buy applications has quadrupled since the increase in the discount. To be clear, eligibility requirements are still quite strict; for example, applicants must have been tenants for five years before they can buy their houses (although this will soon become three years). Moreover, if the new home owners sell their houses before five years, they will have to repay some or the entire discount which they received.

    The Greens in Brighton claim that they face a housing crisis because they do not have enough money to build new council houses. Indeed, Right to Buy has been so successful that 6,000 council houses have been bought by their previous tenants. About 1,000 have been rented out privately, which means that not far from 5,000 extra families in Brighton and Hove now have the freedom and peace of mind of home ownership.

    The reality is that we are not building enough houses at all to meet the rising demand. Unless we remove the remaining structural constraints on supply, then prices will continue their inexorable rise; locking out many from the possibility of owning a home. However, it is disingenuous for the Greens to use the lack of house building as an excuse to end Right to Buy. This is especially the case as the true reason, as became clear in my debate on the Today programme, is that many Greens are uncomfortable with the concept of private ownership of property. Many would prefer that we all live in houses owned by the state.

    Combing through the council’s budget for 2014/15, I found a breakdown of its housing capital spending on page 53. This financial year, the council is planning to spend £5 million on building new council houses. However, it is also planning to spend £10 million on what describes as sustainability and carbon reductions, another £4 million on “tackling inequality” and almost another £10 million on improving housing quality. The Green council is spending almost five times as much of its housing capital budget on all those other things as it is on actually building new houses.

    There may be good reasons to spend money on those other issues, especially on improving housing quality. However, the Greens should not have the gall to complain that they don’t have enough money to build new houses. They do. They have just decided to spend it on other things. Less than 15% of its housing capital budget is actually used to build new homes.

    The Greens and other councils should not attack Right to Buy and home ownership. They should just get on and build more houses.

    Adam joined the Centre for Policy Studies as Head of Economic Research in January 2014. 

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