Scandal of right to buy sell-offs revealed as council leader claims 'We can't go on like this'
PUBLISHED: 07:00 26 March 2019 | UPDATED: 10:03 26 March 2019
Ex-council homes bought under right to buy in Barking and Dagenham have been sold off by former tenants for tens of millions of pounds, new figures have revealed.
Between April 2000 and March 2018, some 1,018 council homes bought under the scheme have been sold on by the owners for a combined profit of £142million.
Some changed hands within months of being bought from the local authority, and for ten or more times the amount that was paid.
Cllr Darren Rodwell, leader of Barking and Dagenham Council, echoed now-widespread calls for change to the policy and told the Post: “It’s clear we can’t carry on like this.
“These figures reveal the immense costs and inefficiencies caused by a misguided policy at a national level.
“In Barking and Dagenham, we have lost 48,500 council homes since the introduction of right to buy in the 1980s, leaving us with only 17,000.”
Right to buy was introduced in 1982 and allows long-standing council tenants to buy their homes at a heavy discount.
Since the year 2000 people in Barking and Dagenham who re-sold made an average profit of £75,667 each– and in many cases hundreds of thousands of pounds more.
Fifty-seven homes were bought from the local authority for less than £20,000 each, all between 2000 and 2002, and sold for a combined total of £5.69m.
One home was purchased for just £8,400 in July 2000, and sold for £112,000 – more than 13 times the amount received by the council– less than six years later.
On average tenants in Barking and Dagenham held onto their right to buy homes for five years and eight months before re-selling, notably faster than the London average.
And seven properties were sold on within less than 12 months.
One former tenant who bought their home at an unknown cost in March 2007 sold it just 54 days later for £130,000.
Another who bought a property for £46,000 under Right to Buy in August 2004 sold it four months later for £130,000, effectively making a profit of £1,024 for every day it was held.
Across the UK right-to-buy homes re-sold since 2000 have made private individuals a collective £6.4bn profit, while more than a million people are on waiting lists for social housing.
In response to the national figures, a spokesperson for the Chartered Institute of Housing said: “We think the time is right to suspend it to stem the loss of homes for social rent, which are often the only option for people on lower incomes.
“Not only are we failing to build enough homes for social rent: right to buy means we are losing them at a time when millions of people need genuinely affordable housing more than ever.”
Polly Neate, chief executive of Shelter, added: “The chronic shortage of social housing available is nothing short of a disaster. Hundreds of thousands are homeless and millions are struggling in deeply insecure and expensive private renting, so replacing social homes on a like-for-like basis is critical.”
There were 4,587 households on the waiting list for social housing in Barking and Dagenham at the end of 2017/18.
The current rules mean councils can only use receipts from right to buy sales to fund 30 per cent of the cost of a new home, with another chunk going to the Treasury.
Cllr Rodwell added: “The right to buy policy costs councils up and down the country so much money.
“We are asking the government to allow the money gained from selling off council houses to go back into building more homes – not just a percentage as it is currently, but every penny of it.”
Right to buy: the national picture
Right to buy gives social housing tenants of two years or more the chance to buy their home from the local authority.
Properties are sold at between 35 and 70 per cent of the market rate, depending on how long the tenant has lived there.
According to the Land Registry, between April 2000 to March 2018 some 110,000 former council houses bought under right to buy in the UK were sold on.
Social housing in Britain has made private owners £6.4bn in collective profit, or £4.3bn in real terms - and £2.8bn in London alone.
The average time ex-tenants in the capital held onto their right to buy home was 2,400 days, or six and a half years.
But eight in London re-sold their ex-council home again within one week of purchase.
According to the latest government figures, less than a third of homes bought under right to buy in England since 2012 have been replaced.
In a statement, the Chartered Institute of Housing told the BBC the policy had effectively been “Britain’s biggest privatisation”.
Tenants who sell within five years should have to pay back some or all of their discount, and those who sell within 10 years have to offer their council the chance to buy it back first.
The government is now developing a new version of the policy which would apply to more people.
Housing minister Kit Malthouse MP said: “Under right to buy, the government has helped nearly two million people achieve their dream of home ownership and we are working hard to make sure that everyone in the country who wants it has a shot at getting on the housing ladder.”