Yesterday, Prime Minister Boris Johnson announced that the Government will extend the ‘Right to Buy’ scheme, originally introduced by Margaret Thatcher to allow people to buy their council houses at a discount, to now allow social housing tenants to also buy their properties.
- Council Housing – owned by the Local Authority.
- Social Housing – owned by some Local Authorities and many Housing Associations, Charities and other ‘not for profit’ groups.
My Johnson suggested that the current younger generation trying to get on the ‘property ladder’ are perhaps the most disadvantaged of all given record prices, higher deposits required and mortgage suitability restrictions making it harder to secure a mortgage.
In addition, Johnson said the government will work with Social Housing providers on a scheme that works for all. In addition, the government committed that for every social housing property sold, a replacement will be rebuilt.
Whilst this may be brilliant news for people in social housing wanting to buy, but we are cynics about motives.
Thatcher: Thatcher allowed ‘old housing’ stock to be sold off that was built post World War II. This mean't more people on the property ladder but also Local Authorities then avoided all the repair and upgrade costs on properties that were in urgent need of updates. Many were also of non-standard construction, which again Local Authorities were able to offload those properties.
Today: Having more people on the property ladder via right to buy means:
- Stamp Duty: More stamp duty revenues for government and continues the cycle of people climbing the property ladder, meaning even greater stamp duty revenue on 2nd and 3rd upscale property moves as well as greater inheritance tax revenues on estates.
- Help to Buy: We suggest a new Help to Buy scheme will be established to help people onto the ex-social property ladder, with government offering deposit help but with equity participation meaning they will benefit long term in property price increases of the future owned privately property, but previously social housing owned.
- EPC Ratings: Many may not be aware, but all tenanted residential property must be upgraded in terms of energy performance ratings with insulation, new heating systems, better windows, water heaters and more to get ratings up to EPC Grade C for new tenants from 2025 and existing tenanted properties by 2028. Local Authorities and Social Housing Groups will benefit from offloading grade D and below social housing without having the costs of upgrading energy efficiency.
- New Build: By forcing Social Housing to build a new property for everyone sold will enable more, cheaper, energy efficient housing to be built for social needs. This will make the country greener but also enable government to achieve their targets of building 1m new properties by the next general election and have limited if any maintenance costs for the next 10 or 20 years.