Research: winners and losers in the council homes sell-off plan

An LGC investigation has however found that councils far beyond these hot spot regions will also have to help fund the Conservative’s extension of right to buy to housing association tenants.

Other areas will remain relatively untouched.

Councils from Bristol to Oxford and Manchester and Leeds would all be expected to sell off their prime properties as they become vacant, according to our analysis.

While each is affected to different degrees, one of those hardest hit claims the policy will cause “social cleansing”, a particularly strong charge.

LGC’s snapshot survey also raises questions about whether the controversial policy would make enough cash to replace homes sold off – a key pledge outlined of the Conservative manifesto.

Our analysis is based on figures supplied by a dozen authorities and uses a Conservative Party statement that sets out “indicative regional thresholds” for high priced homes.

• Focus: Councils to “make love not war” on housing bill plans
• Comment: This housing sell off stands in stark contrast to localism
• LGC View: Counting the cost of widened right-to-buy

Above these ceilings council properties become eligible for sale once a tenant leaves.

The analysis reveals around one in four of Oxford City Council’s 7,717 homes fall within the South East region threshold. This means that just over 5% of its entire stock is likely to be sold off within five years.

While just 2.6% of council housing in Leeds have values over its regional threshold, this would force the sell-off of 1,456 homes, about half of which could be sold within five years

Bristol City Council estimates that “less than 1,000” of its 27,700 homes would fall above the threshold. Close to a third of these could be lost in five years.  

Daniella Radice (Green), its assistant mayor for neighbourhoods , said government’s proposals would have a “significant impact on the council’s investment plans and risk a huge loss of income to our house building programme.”

Exeter and Manchester city councils said less than 1% of stock would be eligible for sale.

Only 22 high value properties would be sold off in Exeter, raising some £3.3m.

Birmingham and Norwich city councils and Blackpool Council told LGC they would not be affected at all, based on the published thresholds.

Unsurprisingly, the largest effect would be in inner London boroughs.

Kensington and Chelsea RBC told LGC it expected around half of the homes that tenants left every year would have to be sold under the policy.

This is equivalent to 550 homes over five years or just under 8% of its tenanted stock.

However, in Waltham Forest LBC just 165 of its 10,000 council homes are worth more than the London threshold.

This ranges from £340,000 for a one bedroom flat to £1.2m for a home with five or more bedrooms (see table).

Just 30 homes would be likely to be sold off over five years in the east London borough.

 

	High value property threshold
Region	1 bedroom	2 bedroom	3 bedroom	4 bedroom	5+ bedrooms
North east	80,000	125,000	155,000	250,000	310,000
North west	90,000	130,000	160,000	270,000	430,000
Yorkshire & the Humber	85,000	130,000	165,000	265,000	375,000
East Midlands	105,000	145,000	175,000	320,000	430,000
West Midlands	100,000	145,000	180,000	305,000	415,000
east	155,000	220,000	265,000	440,000	635,000
London	340,000	400,000	490,000	790,000	1,205,000
South west	135,000	300,000	260,000	375,000	535,000
South east	165,000	240,000	320,000	495,000	755,000

 

London’s largest council landlord, Southwark LBC, estimates about 30% of its homes would fall within the threshold and that 500 would have to be sold off every year.

Richard Livingstone (Lab), cabinet member for housing, told LGC certain areas and types of property would be disproportionately affected.

“There could be some parts of the borough where every single void is having to be sold off,” he said.

“There is a real problem of gradual social cleansing.

“Almost all of our street [facing] property would be sold under the policy.”

While the Conservatives estimate sell offs would raise £4.5bn a year, there are widespread doubts this will cover the cost of the policy’s aims.

Sales receipts, according to a Department of Communities & Local Government statement from May, would be used to “provide new affordable homes in the same area” with the “surplus” used to compensate housing associations for the loss of their assets.

Remaining funds would be pooled in a new £1bn brownfield regeneration fund.

However, councils outside of London doubt these receipts will even cover the cost of replacement.

This is particularly the case when debt charges are attached to the property it is expected to sell off.

David Enticott, finance director at Derby Homes, which manages Derby City Council’s 13,000 homes told LGC the policy would raise “virtually no money” in the city where just 15 homes would fall within the sale threshold.

Richard Lewis, Leeds City Council’s executive member for regeneration said it would struggle to build  suitable replacement homes for £85,000 - the threshold above which one-bedroom properties would be sold off in Yorkshire and the Humber.

“This policy does look like it was created for London and the South East, where sales prices are massively higher than the cost of building,” he added.

The government has not committed to using regional thresholds, and will consult on what should count as an area for the purpose of determining high value thresholds.

Southwark plans to lobby the government to re-think how it funds the right to buy.

An alternative approach to regional thresholds should definitely be considered, according to Cllr Livingstone. “What we’ll be doing is trying to talk to government and hopefully they’ll listen,” he adds.

Changing the approach to regional thresholds might spread the burden of the housing sell-off more widely but it would also result in more homes being sold overall.

Whichever means and method the government picks, one thing is certain: it may well be tricky for councils to present a united front.