Woking aims to revitalise the home-owning ideals of right-to-buy by setting aside the increase in value of the homes’ tenants’ rent as a way to build up enough for a deposit to buy somewhere of their own.
As social housing stock continues to plummet throughout Britain the prospect for househunters and first-time buyers looks increasingly bleak.
Margaret Thatcher’s right-to-buy scheme saw millions realise their dream of property ownership but with councils unable to replace their lost council houses, local authorities admit that the legacy of the project is the current chronic housing shortage.
Council tenants have been left to rely on the private rented sector while local authorities have spent millions supporting families in emergency accommodation.
In 1991 there were 5.2 million council homes in the country, but by 2014 that number had plummeted to just 2.2 million – even as demand kept rising.
Councils and local authorities can no longer afford to lose precious social housing stock to the private market but the dream of home ownership is still strong among thousands of tenants.
Woking BC, on the outskirts of London, has proposed a radical solution to the crisis.
Rather than let tenants of their arm’s length housing organisation, Thamesway Housing, buy their homes, the local authority has turned the scheme on its head and has launched a programme where tenants can earn their own deposit as they rent.
Every year residents will earn a share of the amount the council estimate the property will increase in value by.
The money will be set aside for the tenant in a savings account until they have made enough for a deposit that can be used towards buying their first home.
People living in a two-bedroom property could expect to make £2,400 a year while families in a four-bedroom home could save as much as £3,600 in a single year.
“Housing is one of the issues that comes up again and again on the doorstep, and we felt as a council we had to do something about it,” Woking Council deputy leader Ayesha Azad explained.
“Young people are really struggling. And this gives them the incentive to keep the house nice, to be a good neighbour to everybody,” she added, explaining that a key criterion of the scheme is to be a model tenant so that the property can then be passed on to another resident on the housing list.
In addition to making the best use of the housing stock remaining to them, the council also wanted to find a way to keep young people and families in the borough.
“People simply don’t even have enough money for a deposit,” Azad added. “As a council we wanted to offer something that would give people the hope of earning towards owning their own home.”
Council leader David Bittleston saw that his team would have to act fast to stop young people draining away from the borough.
The Conservative leader pointed out: “Like all councils, we have an ageing population and we needed to make sure young people, who do the jobs we rely on, remain in the borough.
“Our older residents need people to cut their grass and help them out, but if younger people can’t afford to live here, who is going to do that for them?”
Working with the council’s chief executive he looked at ways they could reward tenants and boost affordable housing.
And after examining their options his team realised the local authority would be able to afford financial incentives if they used money from the expected resale value of the homes. Bittleston’s decision to make a bold move was triggered by the shock surge of Labour in the 2015-16 election.
“In the general election of 2015-16 young people went and voted for the Labour party. And a large part of that was about housing,” he said.
“That’s when I came to the view we had to do something to revive the dream of home ownership because a huge group of people have been disenfranchised.”
His canvassing in the Surrey borough had made him realise just how far Britain had moved away from the dream of home ownership for all and what he saw showed him how drastically attitudes had changed in the space of a decade.
“Up until 2008 young peoople had that dream of home ownership. And it was a realistic dream – but then the crash happened and suddenly it was out of reach for a lot of people,” the councillor added.
As leader of the council he became deeply interested in how two problems, supply and demand, could be fixed at the same time with one simple solution, and the Earn Your Deposit programme was born.
The scheme is the first radical departure from right-to-buy in the country in the three decades since it was established in 1981.
And housing officials at Woking BC are hoping central government will give them the go-ahead to roll it out beyond their current remit.
Outlining her hopes for the future of the scheme, Azad said: “It is the first of its kind anywhere. We are very excited by it. We want the government to look at what we are doing and it would be great if the government rolled this out much wider.”
Another bonus of the project is that the scheme has been designed to make it impossible for ‘flippers’ to abuse the scheme for their own gain.
A major issue with the right-to-buy system was that some property speculators bought up former council flats then rented them back to council tenants at vastly inflated sums. Therefore a large number of property moguls got rich while councils grew poorer.
After looking at the many ways the right-to-buy system had been abused, Woking wanted to develop a system that could only possibly benefit tenants and the council itself. Investors and those looking for buy-to-let opportunities will be banned under the scheme.
And in order to stop people scamming the system, to qualify for the scheme tenants must be a Thamesway shorthold tenant for two years before the deposit can be released.
The maximum saving a tenant can earn is £80,000 – as a lump sum deposit towards owning their own house.
More information on the scheme can be found at: www.earnyourdeposit.org.uk