Wednesday, August 04, 2010

Council House Sales - Another Taxpayer Rip-Off


Tyler will have bored you many times with his cigar-puffing reminiscences of growing up on a council estate in the 50s. Deprived? Of course not - back then, a quarter of all families lived on council estates. With another one-third renting privately, for the bulk of the population owner-occupation still lay well into the future.

Today, the percentage who live in council rented property has fallen to just 9% (England - facts here). But add in the percentage living in other social housing (Housing Associations etc), and the total is 17%.

Which is a bit surprising. Given that since 1979, around 3 million council and social houses have been sold to sitting tenants under the right-to-buy scheme (and note this wasn't all down to The Evil Tories - the sales continued under Labour).

What that means - and I do apologise if this is the bleedin' obvious - is that councils and other tax-funded landlords have built more homes to replace those they've sold. In broad terms, across the UK, they started in 1979 with 6 million homes, and now have 5 million. Given that they sold 3 million, that means they built 2 million.

In effect, the taxpayer has been funding a speculative property developer. The developer - S Shopper Homes plc - has built millions of homes in order to flog them off later.

Unfortunately, unlike property developers in the real world, S Shopper Homes has sold its properties at below market prices. Well below market prices. Sitting tenants have been allowed to buy at considerable discounts.

Over the last decade, the price discount in England has averaged 37%. Which works out at nearly £11bn in cash terms. And going back, discounts were even higher. As recently as 1998-99, the average across England was an astonishing 50%.

We haven't been able to track down all the data going back to 1979, but on the basis of what we know about the last decade, we estimate that the total cost to taxpayers of these discounts in today's money has been well in excess of £50bn (ie roughly one-fifth of the sales took place in the last decade, and they cost us £11bn... plus, the historic discounts were higher).

Now, we do understand that the original Mrs T had other reasons for flogging off council houses. And we do understand all that stuff about a property owning democracy. But what we want to know is WTF did S Shopper sell these things at such huge discounts? It's our friggin' money.

And there's something else about council house tenancies as well.

Whether we like it or not, there are some people who just aren't capable of funding and/or managing their own accommodation. Sure, we can let them sleep in a ditch, or reopen the workhouses, but realistically, the Major aside, most of us would not sign up for that. Realistically, taxpayers are are on the hook to house them.

The real choice is between funding them in private rented accommodation - with all the expense and problems we blogged yesterday - or putting them into social housing of some kind.

But we need to remember one very important thing. As Cam said yesterday, allocation should be on a needs basis. Social housing must be seen as part of the welfare safety net, and there can be no right for a tenant to occupy a particular house for ever.

And in future, there can definitely be no right for sitting council tenants to buy out the taxpayer at a knock-down price.

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