Published on 20 Aug 2012

Is it common sense to sell off our social housing?

It is a blindingly obvious idea, according to the housing minister, Grant Shapps. What’s not to like?

Councils should sell off their most expensive properties and reinvest the money to build cheaper homes for their tenants in cheaper areas.

It’s an idea put forward by the think tank, Policy Exchange, and perhaps best summed up by its director, Neil O’Brien: “Social housing tenants deserve a roof over their heads – but not one better than most people can afford.”

And it’s that notion of what you “deserve” as a council tenant, which has sparked off a huge debate today.

The gist of the Policy Exchange report, Ending Expensive Social Tenancies, is this.

Expensive council homes – judged as properties worth more than the average in each region – account for just over 20 percent of all social housing.

Around 28,500 of those properties are freed up every year, when tenants die or choose to move out. If those homes were sold they would make more than £5bn leaving plenty of cash to build between 80,000 and 170,000 new homes.

Grant Shapps isn’t the only one who thinks it’s just common sense. Downing Street backed the plan today.

But among those who actually provide homes for some of the country’s 4 million council tenants – and don’t forget, there are a further 1.8 million on the waiting list – there was real concern.

Keith Exford is the chair of the G15, representing 15 of London’s largest housing associations. For him, this notion of social housing tenants being “undeserving” of a particular type of house in a particular area, is a very dangerous one

He takes issue with the narrative which surrounds it – the popular image of council tenants “living it up” in million pound houses. “I think there are far fewer of those properties around than is being suggested,” he says.

More realistic in his experience are people, many of them working for low pay, who’ve ended up by accident living in an area where property prices have spiralled.

“I think it would be a retrograde step if they say poor people aren’t allowed to live here. I think it would lead to a concentration of disadvantage.”

But while the debate rages, no-one – not even the Policy Exchange – is anticipating anything moving very quickly on this.

Nevertheless it’s an idea not to be ignored. There’s little question that this would be hugely popular, not least with Tory voters.

There is an interesting practical point, made by the director of the Social Market Foundaion, Ian Mulheirn. In principle, he thinks it makes some sense – local authorities selling off pricier properties to reinvest in cheaper ones.

His thought: whether in the current climate the Treasury would allow them to keep the cash or “snaffle it for themselves.”

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11 reader comments

  1. Mr Mason says:

    No absolutely not. A lot of social housing was mis-sold back in the 80’s and 90’s with some tenants that had moved into properties paying barely any rent and being able to buy property, then you also have a situation whereas once they have bought a council property, for example, they go on to sell the property at a later date and then move back into another council property. It is ill thought out.

  2. brunothebear says:

    But why is social housing valued at such a high price, often at a higher price than surrounding private properties in such areas? I suspect a number of factors:

    1. Social housing tends to be built with primary consideration for people without access to private transport, within walking distance and with a mind to social and community needs, such as easy access to public transport, schools, parks, shops and other amenities. In most places such properties attract a premium valuation.

    2. Room size in much social housing, whether built or acquired as such, tends to be greater than in many privately built or sub-divided dwellings. This is especially true of properties built before the Parker-Morris standard on dwelling space was abolished in the 1980s. Again, this attracts a premium valuation.

    3. This might be the nub it; the properties that are most desirable for private buy-to-let landlords are those which offer the best guarantee of a secure and long-term tenant. This especially applies to social housing due to the relatively lower cost of rents and the fact that people want afforable living places to be within easy access of their workplace and local amenities and most importantly, family and friends who’ve been resident for decades and generations before local property prices became unafforable for many less affulent people. The buy-to-let market boomed during the last decade as we all know. Could this be why social housing is valued at a higher price than many surrounding properties in these areas? Do valuers suspect that government had a plan to force councils to sell of this housing eventually, thus pricing it accordingly?

    “Buy-to-let landlords profit as rents rise 4.3% Demand among tenants continues to grow and surveyors predict rents will rise a further 3.9% over the next 12 months”

    http://www.guardian.co.uk/money/2012/aug/10/buy-to-let-landlords-profit-rents-rise

    So local authorites selling off properties which are valued as such will simply remove much needed affordable housing from their housing stock. Again, the poor are penalised for being poor, especially if they have the temerity to want to live in a pleasant area, close to all amenities, the very reason why their affordable social housing is available in the first place. We know that all property is overpriced in many parts of the country, especially the most ‘affluent’; many such areas have large, less affluent populations whose families have lived there for decades and generations, areas such as Islington, Caledonian Rd and Portland Rd in London. If one of these people falls on hard times because of austerity, why should they have to move because all affordable properties have been sold on via a cosy tie-up between government, surveyors and private landlords?

    A fairer alternative would be for second home owners in affluent areas to lose their council tax discounts as, in the main, ‘affluent’ areas contain most second homes. This is something already proposed by government. The extra revenue gained from removing council tax discounts on second homes in affluent areas could then be redirected to local authorities in more deprived areas to allow for more building in our poorest communities. Eric Pickles’ new council funding formula seems to favour wealthier areas areas anyway. There aren’t many second home owners in cheaper areas such as Bradford. The current government proposal is to use the extra income from abolishing the discount to reduce council tax in those local authority areas with large amounts of second homes ownership. The ‘average’ reduction in council tax in areas with large numbers of second home owners will be ‘around’ £ 20 a year. Presumably this reduction will be greatest in areas where there are a lot of second homes and if the average reduction is set as a percentage of local council tax, more will come off council tax for those paying higher rates, of which there will be more in the areas where there are a large number of second homes. This seems unfair when poorer areas are struggling.

    Under the government’s new homes ‘bonus’, councils will be rewarded each time a new home is built; the rewards are based on which council tax band the house sits in, with bonuses paid for each of the first six years the property is occupied, meaning homes in higher council tax bands will attract greater rewards. So councils in those areas where second homes are in high demand, and where there will always be a market for the wealthiest to buy a second home, could possibly build more properties that are bought as second homes placed in a higher council tax band meaning they get even more revenue once the council tax discount has gone, which would do little to alleviate housing shortages for locals in such areas, as they are priced out of the types of homes that are being built and bought in their area. And it still doesn’t address the increasing discrepancy in funding between north and south/rich and poor areas. Redistributing the income to poorer areas as suggested would solve that and still leave affordable, social housing available in ‘affluent’ areas.

    1. Philip says:

      Thank you. That is a really helpful & sensible exposition. I’d just add that some councils are already ending the council tax discount on second homes. And not before time.
      It seems to me we need more social housing & withdrawal of the tax advantages for “buy to let” which have just pushed up prices & made it more difficult for people who work in poorer paid jobs to buy houses in areas within reasonable travel to work. Perhaps the banks might be encouraged to use all that cash (via quantitative easing) they’re sitting on to invest in social housing. (But, of course, it’s easier to point the finger at another aspect of the “undeserving poor” which gains votes at the expense of fairness, community and getting/keeping people in jobs)

  3. John says:

    How many council houses that have been sold are now in the hands of private landlords whose tenants pay their rent by housing benefit?
    How many people who bought their council houses are now back in benefit supported housing?
    As people who buy their council houses receive a substantial subsidy this is just another method of moving public money into private hands.
    I know a landlord who owns eight ex-council houses and calculates how much a house is worth by how much the council will pay in benefits.
    I would be surprised if there are not Landlords who own 50 to a 100 ex-council houses if you find this data it will show the real cost of selling council houses.
    New Labour should be ashamed they didn’t change this but they know its a vote loser

  4. e says:

    Any means by which private greed can get its hands on ‘profit’ flowing from public taxpayer investment Tory thinkers will seek to legitimise, make lawful and next step: required. Obviously happy to see house price inflation continue unabated given the one global economy, it’s simply axiomatic: the land beneath council housing has risen in value along with the type of council homes built before Thatcher’s revolution removed the regulations which stopped developers building small units without cupboards as suitable dwellings; and local authority’s building at all if possible.

    Was a study which purports to come up with a decades old idea that has been practiced in varying forms for years now paid for? Perhaps not, perhaps any payment was for efforts to propagate the idea that “the poor” are a drain on ‘your’ resources. The current moral and housing policy knowledge vacuum afflicting today’s comfortably homed media editors gives it a good chance of gaining traction, and as we all know it’s often the case that timing is everything.

  5. Philip Edwards says:

    Jackie,

    Policy “Exchange” are similar to the Adam Smith “Institute” – nothing more than ultra right propagandists.

    Believe anything they put out and you’ll believe anything.

    1. Philip says:

      But these are the sort of people the Government wishes to use instead of neutral civil servants in advising them – and no doubt picking ideologues from there to become permanent secretaries.

  6. G Smith says:

    Selling of council housing an “idea not to be ignored”? By design or otherwise, Jackie Long’s hopelessly naive blog reflects pretty much everything this vicious government wants in terms of attacking the lives, jobs, services and homes of working-class people.

    Hands off council housing! No more sell-offs! For a massive programme of government-funded public works to build decent, secure, affordable rented homes for all who need them!

    The greedy and the fantastically wealthy created the financial crisis we are in so make them pay for it!

  7. Kuldeep says:

    Along with housing ceocihs you also need to add transportation ceocihs. For example there is no public transportation in the Sunnyside area of Midland and Midland Point area. This needs to be addressed along with housing options.

  8. wendy says:

    Our labour council sold off housing stock in 2004 to a social landlord who has knocked down some perfectly sound council housing stock and built a mixture of homes to buy outright, part rent/ part buy or rent as a social tenant. This to me has reduced social housing stock to rent considerably and could be seen as an illegal land acquisition. The under occupancy tax to be introduced next year makes a mockery of the councils pledge that council tenants after the takeover in 2004 had a legal right to stay in their homes for life, especially as they are being forced out financially. It is tantamount to gerrymandering as in the Thatcher era, considering it is probably Tory voters that are ending up with these ex council houses and charging extortionate rents which the unemployed, sick or low waged cannot afford.

    1. wendy says:

      Those who are unemployed and get mortgage relief are not being penalised by benefit withdrawal nor are the being asked to sell their property and move to a smaller home if underoccupied so this reduction in benefits only applies to those who rent not those with mortgages who may be having the whole of their interest paid for them.

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