Labour faces costs of £50bn to replenish affordable housing after right to buy, report says
Margaret Thatcher’s right-to-buy scheme has left Britain with the legacy of a social housing shortfall that would cost the government £50bn to return the number of affordable homes back to 2010 levels.In a report issued as Labour pushes to reform the Conservative policy introduced in the 1980s, the Resolution Foundation said Keir Starmer’s government faced a huge task to replenish the UK’s affordable housing stock.The thinktank said clamping down on a council tenant’s ability to buy their home would significantly blunt the policy’s impact on the affordable housing supply, but challenges still remained if ministers wanted to increase the availability of sub-market rent properties.Local authority tenants have been able to purchase their homes since 1936, but changes made under the first Thatcher government in 1980 turbocharged the sale of council homes by offering tenants a discounted rate.While the policy enabled more than 2 million tenants to buy their homes, it dramatically depleted Britain’s affordable housing stock amid a lack of homebuilding by councils to replace them over the past four decades.
The UK’s affordable housing stock has fallen from a peak of 5.5m in the 1970s to 4.1m today, despite huge population growth over this period.Freedom of information requests compiled by the New Economics Foundation show that more than 40% of homes purchased under the scheme are now owned by private landlords.In November, Angela Rayner, the deputy prime minister, announced a major overhaul of the policy, including plans to exempt new-build homes from the scheme.
The government has set targets to build 1.5m homes by the end of the current parliament.Publishing its latest housing outlook report on Wednesday, the Resolution Foundation said the government’s legislation would effectively mark the end of right to buy.However, it said the task to replenish the UK’s affordable housing stock would be expensive and challenging to achieve.As many as 125,000 social homes are needed to clear the backlog of families in temporary accommodation in England at a cost of about £15bn, it said.
However, it would require an additional 400,000 homes – at a cost of £50bn – if Labour wanted to return Britain’s affordable housing stock to the level it was when the party was last in power.The thinktank said that with the chancellor, Rachel Reeves, set to announce how Labour will spend an additional £100bn of capital investment over the course of the parliament, building more affordable homes should be a major part of the government’s plans.Cara Pacitti, a senior economist at the Resolution Foundation, said: “Since its introduction in 1980, the right to buy has helped over 2 million council tenants to buy their properties.But it has also worsened Britain’s affordable housing shortage.“And rather than boost home ownership among low-income families, too often it has instead boosted the portfolios of private landlords.
”The Ministry of Housing, Communities and Local Government (MHCLG) said the government was committed to delivering affordable homes.“Too many social homes have been sold off and not replaced, directly contributing to the worst housing crisis in living memory.That is why we are taking decisive action to reform the right-to-buy scheme to make it fairer, where longstanding tenants can buy their own homes but, crucially, councils can replace them,” a MHCLG spokesperson said.“This is part of our commitment to deliver the biggest increase in social and affordable housebuilding in a generation, including major planning changes to support the much-needed delivery of affordable homes.”
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Memo for Rachel Reeves: regulators cannot produce growth out of thin air | Nils Pratley
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