Right-to-buy scheme soon to turn 40

Since its inception, the right-to-buy scheme has been a great topic of debate in the UK. As we approach the election this week the controversial scheme is once again the subject on everybody’s lips. Buildingspecifier.com Editor Joe Bradbury discusses how right-to-buy has affected Britain – for better or worse.

Over 2 million people have bought their home from the British stock of social housing since it was introduced in 1980. This is seen as both good and bad news, dependant on which side of the fence you are viewing it from.  On the plus side, it has helped millions of people to make that first tentative step onto the property ladder. However, it has also massively depleted the social housing stock, resulting in a housing shortage and spiralling property costs which has thrown the housing industry into chaos.

In England the current government staunchly defends the general principle of the right-to-buy scheme and plan to continue it, should they be successful at the ballot boxes this Thursday. In stark comparison, Scotland recently abolished the right-to-buy scheme, which illustrates just how much the right-to-buy has divided the UK on opinion in the space of 40 years.

Right-to-buy ended for all council and housing association tenants in Scotland as a result of the Scottish Housing Bill which was passed by the Scottish Parliament on 25th June in 2014 and became an Act when it received Royal Assent on 1st August of that year. The SNP are even buying back council housing from people who have purchased their home under the scheme, in a bid to undo some of the damage that has been done.

So what has the right-to-buy scheme actually done for Britain over its rocky 40 year history?

It increased house ownership

In the 1980’s, right to buy encouraged more people to buy their homes throughout the UK. We are now experiencing a paradigm shift as house prices soar out of reach for many first-time buyers. Despite it now seemingly resulting in the exact opposite, home ownership increased exponentially in the 80’s, proving that at least for a short time, it worked!

It boosted renting in the UK

As potential first-time buyers now struggle to raise enough money to cover a deposit for a house or earn enough to cover the mortgage, the idea of home ownership has sadly become a pipedream for many. The only other option available for people who wish to move out of their parents’ home is to rent, which consequently has resulted in a large boost in the buy-to-let section of the housing market – true Thatcherism at play!

Housing shortage/crisis

There is now undoubtedly a shortage of council-owned social housing across the UK, replaced instead with privately owned “affordable housing,” which can, at times, be a contradiction in terms. In order to be classed as affordable, housing associations can charge up to 80% of the local market rental costs. In London, where the rents are frankly staggering, this means that the affordable housing that has replaced the social housing is equally as unobtainable for people who have always lived in the area as the very concept of buying a house. This is not the purpose of social housing and this is where the right-to-buy has failed – spectacularly.

In summary

It seems that in the short term the right-to-buy scheme was highly profitable for many. However, as time passes it has raised further issues that have only been realised with the benefit of hindsight. These issues have plunged the housing market into disarray, suggesting that what worked in the 80’s certainly isn’t working now.

The policy most certainly encouraged its primary objective of increasing home ownership throughout Britain but has ultimately resulted in increased demand for private rental properties; the exact opposite of what it initially intended to achieve. Increasing investment in the buy-to-let market has pushed prices out of the reach of many first-time buyers, creating a self-perpetuating state of crisis. A place to call home shouldn’t be an unobtainable dream; it is a fundamental right for everybody. In conclusion, right-to-buy is littered with hypocrisies and contradictions that have undermined and devalued what was once considered a good idea. If whoever wins the election intends to continue the right-to-buy scheme, many issues would need to be addressed urgently and it would need to be rebranded if it stands any chance of regaining the trust of an injured property market. We can forgive, but we can never forget.