Suspend Right to Buy to help tackle social housing crisis, government told: ‘It’s exploitative’

Margaret Thatcher’s Right to Buy scheme for new build council properties could be suspended within six months, a leading Labour politician has suggested.

Clive Betts – MP for Sheffield Southeast and chairman of the Housing, Communities and Local Government Committee between 2010 and 2024 – said he would be “very surprised” if the current policy was unchanged in half a year.

“[Right to Buy] means the housing system is like a colander, with holes in it. You build more houses, but more houses get sold, end up on the private market and get rented out by landlords,” he told the Big Issue. “There’s a loss of social housing, [the policy] couldn’t be designed to be more wrong.”

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Right to Buy was a scheme brought in by late Conservative prime minister Thatcher and opens the door for social housing tenants to buy their homes at a discount.

Betts made the comments as more than 100 English councils warn that the system for financing social housing is “broken”.

According to a Southwark-commissioned report released today (4 September), councils expect a £2.2bn shortfall in their dedicated social housing budgets by 2028.

This “black hole” will force the sale of already-diminishing housing stock and prevent councils from building new homes.

The “unprecedented coalition” of councils called for an end to Right to Buy on new build council properties, an emergency injection of £644m to stabilise housing accounts, and a reform to the financing system.

Deputy prime minister Angela Rayner has promised a “council housing revolution”, committing the government to delivering 1.5 million homes over the next five years.

But the government will not be able to deliver these homes without abolishing Right to Buy on new buildings, said Southwark Council leader Kieron Williams.

“We’ve heard of examples around the country of companies preying on vulnerable tenants, saying, ’We will lend you the money to buy your home, we will buy it off you,’” he said.

“It’s straightforwardly exploitative. They’re losing their home, and that home is being lost as a public asset.”

Williams said that meetings with the government had been “very positive”.

How is the funding model for social housing broken?

Between 1946 and 1980, England built 4.4 million new social homes – an average of 126,000 a year. But it has now been more than 30 years since councils last built more than 10,000 homes a year.

Meanwhile, Right to Buy has made matters worse. Of the almost two million social homes which have been sold through Right to Buy, Shelter estimates that only 4% have been replaced. The last government increased discounts and loosened eligibility criteria, boosting Right to Buy sales to an average of 26,000 per year.

The subsequent shortage forces people in dire need of housing into temporary accommodation. A record 109,000 households in England are living in temporary accommodation, including 142,490 children.

The spend on temporary accommodation – which has skyrocketed to £1.7bn a year – is draining their budgets.

Meanwhile, rental incomes from social housing have not increased. Councils manage outlay and income from council accommodation through ring-fenced Housing Revenue Accounts (HRA). HRAs are now in a “perilous state”.

“Rather than increasing supply, the reality is that some councils will have no option but to sell more of their existing stock, on top of Right to Buy sales, to finance investment in an ever-shrinking portfolio of council homes,” the report authors warn.

The council group want an HRA model which includes “long-term, certain rent and debt agreements”. They also are calling for a “green and decent homes programme”.

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