Originally, the cost of discounts was to be funded by enforced sales of high-value council housing stock. Selling Off the Stock projected that this might produce £1.1bn to £1.7bn annually. However, this proposal was rightly criticised and later dropped, financing the pilot voluntary RTB via direct Treasury funding. The logical conclusion is that extra Treasury funding would be required again.
A key question is whether spending roughly £70,000 per home to support people into homeownership is good value for money. For that price, the social landlord loses an existing unit and gains an equivalent (assuming there is like-for-like replacement). The new owner gains a home (with a mortgage) and stops paying rent. Eventually, the home sold is resold, either to a (probably more affluent) owner-occupier or (almost equally likely) to a buy-to-let landlord, meaning a possible new cost to the exchequer in housing benefits towards the rent.
In contrast, the CIH, working with the Centre for Homelessness Impact, recently showed that grant of around £70,000 per unit, if used to finance a programme to build 10,000 more social rented homes annually, could come close to breaking even by enabling social landlords to rehouse low-income tenants. This would offer far higher value for money.
“Homeownership is a legitimate aspiration for government policy, but it cannot be at the expense of the poorest households”
It should be recognised that the government is talking about selling assets that do not belong to it, but often to charitable organisations. They exist to provide benefit to the community, holding their assets in trust by providing affordable homes for rent. Forcing the sale of assets creates a heavy risk, damaging funder confidence, and reducing the sector’s capacity.
We would urge the government to think again.
If the scheme does go ahead, it is vital that it does so with the cost of discounts fully funded by the exchequer, with no return to the discredited proposal to sell off high-value council housing. Nor should associations have to use resources urgently required for new build and for building safety and decarbonisation work. Any replacement homes should be like for like, ie social rented homes replaced with new ones.
Homeownership is a legitimate aspiration for government policy, but it cannot be at the expense of the poorest households.
As Michael Gove, the housing secretary, said in a recent speech: “We’ve reached a situation where the availability of social housing is simply inadequate for any notion of social justice or economic efficiency. If we want to have functioning communities, if we want our cities and towns to have places where key workers and individuals who keep our public services going can have a decent roof over their heads and raise a family in stability and security, then we need more social homes.”
RTB is not the answer.
Gavin Smart is the chief executive of the Chartered Institute of Housing