Why aren't English councils replacing 'Right to Buy' homes?

Homelessness charity Shelter recently highlighted that councils in England are not replacing homes sold under the government’s 'Right to Buy' scheme. While there can be no doubt that Shelter raise an important issue, the charity's figures tell only one side of a complex story.

Housing shortage

Shelter’s stats show that just two of England's 166 local authorities have replaced more properties than they've sold in recent years, which has resulted in a considerable net reduction in available social housing.

Given that the scheme is being extended to some 1.3m tenants, the charity is rightly concerned that society's poorest will struggle to find a place to live. What's causing this situation?

Counting the cost

Under 'Right to Buy', social housing tenants can sometimes buy properties for as little as 30% of their market value. This low sale price means that councils are not getting enough return to build replacement homes.

Worse still, councils don’t even get to keep all of the money they receive from the sale of the cheap properties. Peter Box of the Local Government Association argues that in order to make re-building feasible, “councils need to be able to retain 100% of receipts from sales", and also suggests that "Right to Buy discounts should be set locally so they reflect the cost of houses in the area."

Interestingly, even charities whose remit is to build affordable houses are struggling in the current climate, indicating the extent to which local authorities are working against the odds.

Bigger problems

While money is obviously at the heart of this issue, it's also unclear where councils are supposed to find space for new properties.

While 'brownfield' sites are often suggested as possible locations for affordable builds, Stockport council leader and Greater Manchester planning chief Sue Derbyshire points out that “such sites are often surrounded by congested roads, full schools and over-stretched local services...a planner’s brownfield site is often a much loved open space to local residents.”

Although these comments indicate that there's no quick fix to the 'Right to Buy' dilemma, local authorities can free up some much-needed cash by ensuring that unpaid debts are collected promptly. If you work for a local council that's struggling to replace homes, contact Dukes Bailiffs to discuss how sensitive debt collection can improve your financial situation.