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RIGHT TO BUY COSTS, SAYS HOUSING CHARITY

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The Right to Buy is costing the taxpayer billions and increasing the misery of homelessness - according to a report...
The Right to Buy is costing the taxpayer billions and increasing the misery of homelessness - according to a report out today from Shelter, 'Time for a Change - Reforming the Right to Buy'. The report follows recent media reports that the government is considering reforms to the Right to Buy in light of evidence that it is being abused. Shelter is calling on the government to go further and temporarily withdraw the discounts available under the scheme in areas of severe housing shortage, particularly London and the south-east.

Figures from Shelter show that the discounts given to tenants under the scheme over the last five years add up to nearly£4.5bn - more than the subsidy for new affordable housing over the same period. The charity estimates the cost of building new affordable homes to compensate for the social housing lettings lost as a result of Right to Buy sales in London and the south-east alone will be over£1bn over a five year period from 2001/02(1).

Ben Jackson, Shelter's director of external affairs, comments: 'The Right to Buy as it currently stands is a catastrophic waste of taxpayer's money. With one hand the government is giving away billions of pounds along with the nation's stock of affordable housing. With the other it is having to spend billions on building new affordable homes to replace those sold under the scheme.

'The Right to Buy is exacerbating a chronic shortage of affordable homes in many parts of the country. Shelter is not opposed to the scheme in principle, but the priority must be to stem the loss of valuable housing, particularly in London and the South East where the shortages are most severe and thousands of families are experiencing the misery of homelessness.'

Shelter argues that the policy agenda and the government's priorities have changed significantly since 1980 when the Right to Buy was introduced. The need for affordable housing then was considerably less acute, with fewer than 5,000 homeless people and families living in temporary accommodation, compared to the current figures of 81,250 in England and 60,510 in London and the south-east where the housing crisis is most severe (2). The government has made increasing the supply of affordable housing a key policy and spending priority and reforming the Right to Buy could have a significant impact on the supply of social housing lettings, particularly in areas where shortages are most severe.

Shelter is calling on the government to temporarily withdraw the discount regime in areas of high housing demand while it carries out a policy review to identify alternative ways of enabling tenants to accumulate assets without reducing the supply of affordable homes. It is also calling for specific measures to stop the scheme being abused.

OTHER KEY FIGURES

- Since the introduction of the Right to Buy in 1980 nearly 1.5 million homes have been lost - more than 750,000 of which have not been replaced

- Since the introduction of the Right to Buy in 1980 social housing stock has shrunk by nearly 20 per cent

- The number of sales under the policy is currently three times higher than the rate at which new affordable housing is being built

- In 2001/02 52,000 homes were sold under the scheme, while only 18,000 units of new social housing were built

- In 2001/02 in London 11,500 homes were sold under the scheme, while only 4,000 units of new social housing were built

- The average cost to the exchequer of each new unit of social housing built is around£60,000 and in London the average cost has now increased to in excess of£90,000

- The average receipt from each council house sold is currently around£27,000 and in London around£40,000

- The cost of housing homeless households in bed and breakfast who would have been housed through the re-lettings in London in 2000/01 was over£11 million (3)

- In London the average cost of buying a home just seven years ago was under£100,000, since then prices have more than doubled to£214,000

NOTES

1. Properties sold under the Right to Buy would not necessarily have become available for re-letting if they had remained under local authority control. Shelter bases calculations on an average re-let rate of around five per cent

2. Number of homeless households in temporary accommodation from ODPM Statutory Homelessness Stats : 2nd Quarter 2002, released 11.9.02

3. The average gross daily cost of bed and breakfast accommodation for homeless households in London in 2000/01 was£52.34 (CIPFA Homelessness Statistics, 2000/01)

4. The full report is available here.

FACTS AND FIGURES

1. Comparison of the value of discounts given to tenants through Right to Buy and the cost of building new affordable housing

NATIONAL

Financial Year / Value of discounts / Cost of new affordable housing built

1997/98£883m£1,047m

1998/99£932m£941m

1999/00£1,297m£966m

2000/01£1,248m£1,117m

TOTAL 1997-2001£4,360m£4,071m

2. Table to show the difference between new affordable housing built and Right to Buy (RTB) sales between 1980-2001

Region / Total Social Housing Build / Total RTB Sales / Loss of Stock

North East 40,505 125,156 84,651

North West 103,274 167,359 64,085

Yorkshire and the Humber 65,627 154,022 88,395

East Midlands 49,505 135,499 85,994

West Midlands 71,374 177,380 106,006

East 56,223 164,032 107,809

London 118,946 236,521 117,575

South East 141,644 186,190 44,546

South West 61,705 127,293 65,588

England 708,803 1,473,452 764,649

3. Number of homeless households in temporary accommodation

Region / June 2001 / June 2002 / % change

North East 1690 1940 15

NorthWest/Merseyside 1950 1800 -8

Yorkshire&Humberside 1960 2010 3

East Midlands 1920 2180 14

West Midlands 1890 1540 -19

East England 5080 5620 11

London 43370 48230 11

South East 11940 12280 3

South West 5530 5650 2

England 75330 81250 8

Number of homeless households in temporary accommodation from ODPM Statutory Homelessness Stats : 2nd Quarter 2002, released 11.9.02

4. Number of Right to Buy sales and percentage of housing stock between 1980-2001

LONDON BOROUGHS

London Borough / Total RTB sales / Sales as a % of original stock

Barking and Dagenham 15424 39.3

Barnet 8316 39.3

Bexley 681 5.1

Brent 5600 30.0

Bromley 7704 37.0

Camden 7917 22.1

City of London 1728 37.4

Croydon 8609 34.7

Ealing 6537 26.2

Enfield 9410 37.7

Greenwich 6684 17.4

Hackney 7260 17.6

Hammersmith and Fulham Not available Not available

Haringey 7663 27.5

Harrow 3718 37.4

Havering 5742 26.8

Hillingdon 5566 26.0

Hounslow 7030 31.1

Islington 7803 19.4

Kensington and Chelsea 1894 19.4

Kingston upon Thames 2556 31.5

Lambeth 7618 15.4

Lewisham 10661 24.9

Merton 4928 31.8

Newham 9804 28.3

Redbridge 597 5.3

Richmond upon Thames 4024 35.3

Southwark 10392 17.2

Sutton 4611 33.1

Tower Hamlets 10220 22.0

Waltham Forest 5183 25.5

Wandsworth 12703 30.4

Westminster 7176 29.8

COUNTIES IN THE SOUTH EAST

County / Total RTB sales / Sales as a % of original stock

Buckinghamshire 12700 27.9

East Sussex 8548 28.6

Hampshire 25880 32.7

Kent County 31988 29.1

Oxfordshire 14139 35.5

Surrey 23558 33.8

West Sussex 21382 32.1

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