According to official figures from the Department of Communities and Local Government, 307 properties have been started or acquired to replace almost 3,000 sold in the first quarter of the 2015/16 financial year. Local authorities received over £223m for these homes, with an average of £80,000 per property.
Under Right to Buy, which has been reinvigorated in recent years by David Cameron’s Conservative-led Governments, councils are given three years to replace the houses sold under the scheme. However, since April 2012, more than 32,000 homes have been sold with only 3,644 starts or acquisitions being made to replace them so far.
Despite this evidence, the Government has claimed the figures are encouraging, as they show more people being able to buy their council homes. Brandon Lewis, housing minister for DCLG, said: “For years, the discounts available under the Right to Buy were left to dwindle, denying thousands of people the opportunity to own their own home.
“This reinvigorated scheme has turned that around, and means nearly 40,000 people have been able to buy the home they love – many of whom might otherwise never have had the chance to become homeowners.”
He continues to claim that councils are now replacing additional homes sold in 2012 on a home-for-one basis, adding that nearly £964 million in sales receipts are being re-invested into building new homes; levering a further £2.2 billion of investment over the next three years.
However, there is still a substantial gap between sales and replacements; since Right to Buy discounts were increased in April 2012, 32,288 homes have been sold, while only 3,644 have been started or acquired to replace them.
Gavin Smart, deputy chief executive of the Chartered Institute of Housing (CIH), said: “We’re very concerned about the loss of social rented homes at a time when more and more people are in need of affordable housing. Today’s (September 170 figures make it clear that the number of replacement homes being built is nowhere near the number being sold.”
A recent survey of local councils conducted by CIH found 73% of councils felt the current system only allows them to replace half or fewer of homes they have sold, while 12% said they will not be able to replace any at all.
Mr. Smart added: “It’s always been clear that there would be a lag between homes being sold and homes being built to replace them, but more than three years since right to buy discounts were increased there is mounting evidence that one for one replacement is nowhere near being achieved.”
A similar study by the District Council’s Network (DCN) of 200 of its members indicated that 376.5 new homes were built as replacement properties for some 3,019 homes sold under Right to Buy between 2012/13 and 2014/15 – a replacement rate of 12.5%.
Despite this “mounting evidence”, the Government plans to extend Right to Buy to housing associations, giving 1.3m people the ability to purchase their home under the policy. This extension will be funded by forcing councils to sell off their most valuable properties in a move that homeless charity Shelter claims will see almost 113,000 council homes disappear from social housing.
In related news, the same study by DCN found that many councils around the country are abandoning construction of thousands of new homes in the wake of a surprise cut to social rents announced as part of the Summer Budget.
Chancellor George Osborne announced in July that the Government would impose 1% annual rent reductions in the social rented sector for four years from April 2016. At the time, the Office of Budget Responsibility (OBR) warned that the measure would “directly reduce social landlords’ rental income, and therefore their financing for, and returns to, investing in new house-building.”
According to DCN survey, the decision has left district councils facing a £719m revenue gap. In an attempt to plug this hole, they have begun to cancel house-building plans, with over 5,000 homes already shelved by district councils.
As a result of the Chancellor’s plans, the OBR reduced its forecast for residential investment by around 0.7%, suggesting that around 14,000 fewer affordable homes will be built. The National Housing Federation has since estimated the construction of at least 27,000 housing association homes could be cancelled as a result.