Almost 5% of London’s council housing stock would have to be sold in the first five years under the government’s proposal to make local authorities sell off their most valuable properties, a snapshot study suggests.
The government confirmed its commitment to extending the right-to-buy to housing association tenants in yesterday’s Queen’s speech. The scheme will be funded through the sale of councils’ most valuable homes.
Ahead of that, Camden, Enfield, Haringey, and Islington LBCs commissioned data and economic analysts Liverpool Economics to compile an “interim” report on the impact of the policy. It found receipts from the sales of empty properties were unlikely to be sufficient to cover all of the costs as envisaged by the Conservatives – the party’s manifesto estimated selling properties as they became vacant would raise £4.5bn per year.
The report’s authors used data contained in a Conservative press release which outlined what would constitute an expensive property in different regions of the country. In London that varied from £340,000 for a one-bed property, to £1.2m for a property with five or more bedrooms.
Of the 73,727 properties owned by the four boroughs, the report estimated 3,467 would be sold under the policy in the first five years. It predicted Islington and Camden would be most affected with 1,843 of Islington’s 25,736 properties, and 1,509 of Camden’s 22,267 properties being sold in the first five years. Haringey only stood to lose 115 while it was predicted none of Enfield’s properties would meet the threshold of what constitutes an expensive property.
Property sales are expected to fund right-to-buy discounts by compensating housing associations for the loss of their asset, go towards building replacement homes, and also contribute to a brownfield fund to aid the development of additional housing on previously used land.
The report said as a result it was “highly likely that a substantial part of the cost of building a replacement home would have to be financed through additional borrowing”. It estimated that even if the new policy to replace homes worked, there would be a time lag of at least two years from the sale of a home to it being replaced. It argued some or all of the replacement homes might have to built in different boroughs which brought “a number of complications” as councils would either have to start buying land in other areas for letting to their own tenants, or funds would have to be transferred to other authorities or housing associations.
James Murray (Lab), Islington’s executive member for housing, said the policy was “likely to have a destructive impact” across London. He said: “Thousands of council homes would have to be sold, particularly in inner London boroughs, and the report underlines that there would be a big question mark over the government’s promise that the homes would be replaced.”
A recent survey by the Local Government Association, Chartered Institute of Housing, and the National Federation of ALMOs found only half or fewer of homes sold under the existing right-to-buy for council homes had been replaced.
Ahmet Oykener, Enfield’s cabinet member for housing and housing regeneration, called on the government to ease borrowing restrictions on councils so they can build more homes.
The report said the time lag on replacing homes would have a negative impact on families unable to get a council tenancy and the homeless.
Haringey’s leader Claire Kober (Lab) said: “Forcing councils and housing associations to sell off the few affordable homes that remain in areas where prices are skyrocketing will only serve to exacerbate, not resolve, the housing crisis.”
The extension of the right-to-buy has been met with opposition within the Conservative party. Last week London mayor Boris Johnson expressed concern about the policy, as had leading Conservative councillors in the run-up to the general election.