Councils in London are spending over £22m each year renting back homes sold under the Right To Buy, a new report reveals.
Right to Buy: Wrong for London, from Labour’s London Assembly Housing Spokesperson, Tom Copley AM, also identifies that the number of Right To Buy homes now in London’s private rented sector has hit at least 54,000.
Copley said that at a time when the need for homes at social rent level far outweighs the numbers being built, it was “reckless” of the government to continue with the Right To Buy.
He said it was failing London and called for its abolition.
Responses to Freedom of Information (FOI) requests submitted by Mr Copley to all London councils, found that the number of Right to Buy homes now in the private rented sector has risen by at least 11,825 in the last five years to approximately 54,000.
These figures are considered conservative, as some local councils did not provide data.
The stats show 42% of homes sold through Right To Buy in London are now being rented out by private landlords at market rates – up from 36% in 2014.
London needs 30,972 new low-cost rented homes every year, according to the 2017 London Strategic Housing Market Assessment (SHMA).
With demand outstripping supply – just 7,905 low-cost rented homes have been built in the last five years – councils are being forced to rent back properties formerly sold under the Right To Buy to use as temporary accommodation to meet the needs of homeless families.
Copley’s report found that at least 2,333 Right to Buy homes are now being rented by local authorities, with Newham alone renting back 808 of these at a cost of £12.9m per year.
The total yearly cost to councils renting back these properties is at least £22,345,760.
Westminster Council are renting back 650 former council homes, but couldn’t provide a figure for the annual cost of this.
Based on the average cost of renting back council homes across London, this could be in excess of £8m a year.
In 2012 the government decided to ‘reinvigorate’ Right to Buy, increasing the discount on council homes to £75,000 across England.
The following year the discount was increased to £100,000 in London, with the government promising promised one-for-one replacement, within three years, on any additional homes sold due to the increased discount.
By March 2018 the government was falling behind on this pledge.
Nationally, since 2012, 17,072 additional replacements were required, but the number of homes started or acquired was below 16,000.
The Mayor of London has pledged to start 11,000 new council and Right To Buy replacement homes by 2022.
He has also introduced a new ‘ring-fence offer’ for London councils to protect their Right to Buy receipts. But in order to meet need, some councils are buying back homes they had previously sold under the Right To Buy.
Ealing Council, for example, has bought back 516 former council properties. Whilst more than half of these were for regeneration projects,
Ealing found themselves spending £107,071,333 buying these back – more than six times the £16,230,470 they received through the original sales of these homes, which were discounted by a total of £15,648,455 under the Right To Buy.
Copley said: “Right To Buy is failing London and should be abolished. Home ownership is still important for many people, but it can’t come at any cost, particularly if it means families struggling to put a roof over their heads or living in poor conditions.
“It’s not right that cash-strapped councils are having to fork-out eye-watering amounts renting back properties they were forced to sell at a discount.
“Many councils are building new council homes again for the first time in a generation.
“But we risk treading water or even going backwards if we continue to lose precious existing homes to Right to Buy.”
He added: “At a time when the need for homes at social rent level far outweighs the numbers being built, it’s reckless to continue to force the discounted sale of council homes.
“At the very least, we want to see the government exempting newly built council homes from the Right To Buy and legislating to prevent Right to Buy homes being let on the private market.
“But with councils fearing their investment in social housing could be wasted, and the Right To Buy adding to London’s housing crisis, abolition is the best way to protect the capital’s social housing stock.”