Homing in on the first rung

Twenty-five years after Margaret Thatcher’s government launched
its right-to-buy scheme allowing council tenants to buy their homes
at cut-price rates, social housing remains an important part of the
political landscape.

The initiative changed the face of social housing in the UK and 1.7
million council tenants have since bought their homes.

These days the shortage of affordable housing has become an issue
for many voters, especially those in low-paid jobs.

In the past six months the three main political parties have
produced major policy documents to suggest that social housing will
feature at the front line of the election battlefield. Here we
examine what they have to offer.

In January the Office of the Deputy Prime Minister
(ODPM) published its five-year plan, Homes for All.(1) It details
Labour’s strategy for increasing home ownership, which

  • Helping 80,000 more people into home ownership by 2010.
  • Establishing a homebuy scheme so that up to 300,000 social
    housing tenants can buy a share in their local authority or housing
    association homes.
  • Reinvesting in housing the proceeds from homebuy sales.
  • Continuing right-to-buy (from a local authority) and
    right-to-acquire (from a housing association) schemes for people
    who qualify.
  • Changing the planning system to ensure more affordable housing
    for key workers and young families in rural areas.
  • Building an extra 10,000 social housing homes a year by 2008, a
    50 per cent increase on current rates.

Launching the plan, deputy prime minister John Prescott said:
“It means more first-time buyers, more people in social housing and
more key workers like nurses and teachers being able to get on the
housing ladder.”

The ODPM’s home ownership task force first suggested the homebuy
scheme in 2003. Merron Simpson, head of policy at the Chartered
Institute of Housing which sat on the task force, says: “The
government has taken the idea and brought it into right-to-buy.
What we’d hoped for was for it to replace right-to-buy so that when
people buy their houses they wouldn’t be expected to pay 100 per

The housing association representative body the National Housing
Federation (NHF) supports the government’s attempts to encourage
social housing tenants into ownership as long as the initiatives
are affordable and sustainable over the long term for the occupant
and landlord.

As housing associations borrow money against their housing stock
they must be able to make their loan repayments. This is done
through incomes from rents but there is a danger that this revenue
stream will be lost if more housing associations encourage tenants
to buy a share in their homes.

Danny Friedman, head of policy at the NHF, says: “We have to make
sure there is some form of rental change to cover housing
association’s debt – it is simply good business and not just us
being bloody-minded.”

The Conservative Party believes in giving everyone the
opportunity to own their own home. Its policy document, The Right
to Own: Action on Housing, states: “The housing policy of the next
Conservative government will have at its heart the objective of
helping more people fulfil their dream of home ownership by making
the housing market work better.”(2)

To do this the Conservatives aim to build on the right-to-buy
principle by developing policies to enable individuals to become
home owners. If they are elected they will:

  • Extend right-to-buy to more than one million housing
    association tenants.
  • Help tenants to buy any home of their choice by allowing them
    to build up “discounts” that could then be used to reduce the cost
    of a property on the open market.
  • Enable tenants to build up a stake in their home through a
    right to shared ownership, whereby the tenant owns part of the
    property and rents the remaining proportion from the housing
  • Extend support for shared equity schemes between tenants and
    housing associations.

However, the commitment to extend right-to-buy to housing
association tenants “doesn’t stack up legally, financially or in
terms of the social good”, says Friedman.

Primary legislation would be needed for housing associations to
sell their properties to tenants because housing providers are
independent social businesses. Friedman says: “This policy would
wreck the ability of the sector to do all the good it is doing that
helps us meet a whole range of social and government

There are about 1.8 million housing association tenants, of whom
nearly 1 million have an option to own their property. Friedman
says 780,000 tenants who do not qualify under current rules could
do so under the Conservatives. “This could cost the government
£18.7bn in discounts to tenants and to housing associations
themselves,” he adds. This could pay for the construction of
375,000 new homes.

A Conservative Party spokesperson said a Tory government would
reinvest the money made through the sale of housing association
properties back into social housing.

Housing is a basic human right, according to the
Liberal Democrats. The party’s housing policy briefing sets out a
belief in more affordable housing; homes that are environmentally
sustainable and communities that are cleaner and safer.(3)

A Liberal Democrat government would:

  • Develop new forms of affordable home ownership, between
    full-renting and full owner-occupation.
  • Develop mutual home ownership: a household would have shares in
    the housing association that owns the property in which they
  • Encourage greater use of shared equity schemes so housing
    association and council tenants would have a “right to invest” in
    their home, building up a stake without buying the house or flat
  • Pilot community land auctions to donate public and private land
    which is not used for housing to housing associations or registered
    social landlords for affordable housing.

The right-to-buy initiative was first implemented by a Liberal
Democrat council in Northamptonshire before being adopted as policy
by the Thatcher government. Despite creating the idea, the party is
aware of the resulting problems.

Edward Davey, the Liberal Democrats’ spokesperson on ODPM issues,
says: “Right-to-buy has led to a desperate shortage of social
housing in some areas primarily because, until the recent reforms
of the system, councils were not allowed to invest the money they
received from sales in new homes.”

The Liberal Democrats would not extend the full right-to-buy to
housing association tenants as Davey says it would “undermine the
ability of housing associations to raise finance”.

Developing mutual home ownership is an exciting way to provide
housing in the future, says Simpson. However, under the current
housing system she believes it will only ever be a niche form of
provision that may appeal to tenants who want a flexible lifestyle
and who can trade their homes down.

Obtaining quality land through auctions is important to ensuring
that affordable housing can be developed.

Friedman says: “If the Lib Dems can unlock the key to low price and
good quality land through this they could provide a useful tool for
low-cost homes and home ownership.”

(1) Homes for All, ODPM, January 2005
(2) John Hayes MP and Scott Kelly, The Right to Own: Action on
Housing, October 2004
(3) Liberal Democrats Policy Briefing 16: Housing, January 2005

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