Call for right-to-buy overhaul as social housing in Islington re-sold for millions of pounds
PUBLISHED: 07:00 26 March 2019 | UPDATED: 09:48 26 March 2019
More than three thousand council houses bought under right to buy in Islington have been re-sold at a collective profit of £861million, new figures have revealed.
According to data provided by the Land Registry, since 2000 some 3,136 homes acquired from the local authority at a heavy discount have since been sold on by former tenants.
Islington Council has called for changes to the controversial policy, which was introduced in the 1980s and currently only allows town halls to use the receipts to fund up to 30 per cent of the cost of building new homes.
Town halls are also not permitted to combine those receipts with grant funding, meaning the other 70 per cent must be found without the help of the government or mayor of London.
Cllr Diarmaid Ward, executive member for housing and development, said: “London is in the grip of a desperate housing crisis and Islington is no exception.
“We are doing everything we can to help people into secure, genuinely affordable homes.
“Government restrictions on where the money from right to buy sales goes, and what it can then be used for, have hampered our ambitions to deliver council homes and genuinely affordable homes in the borough.”
Once a property is purchased under right to buy the council has no control over what the owner does with it, or influence on the sale price.
Since the year 2000 people in Islington who re-sold once publicly-owned homes made an average profit of £153,260 each, but in many cases hundreds of thousands of pounds more.
Forty-nine properties were bought from the local authority for less than £20,000 and later re-sold for a combined total of £11.7m.
Some properties changed hands again almost immediately after being acquired from the local authority, with 21 sold in less than six months.
Thirteen former tenants made more than £1,000 a day in the period between acquiring the property from the council and selling it on.
One house purchased for £54,000 in December 2006 was sold just 84 days later for almost five times the original price at £249,995, making the owner £2,333 for each day they held onto it.
As house prices in London soared, so too did the value of properties bought under the scheme, with one home bought for £302,000 in 2007 re-sold in 2014 for more than £1m.
Meanwhile, the number of households on the waiting list for social housing in Islington had reached 14,469 at the end of 2017/18.
Cllr Ward added: “Islington is one of the country’s most successful local authorities at delivering housing and we are now building more new council homes, prioritised for local people, than any time in the last 30 years.
“Despite ongoing massive government cuts to the council’s core funding, we are committed to delivering 1,900 new genuinely affordable homes – including at least 550 new council homes – by 2022, to help more people who badly need better housing.
“The funding rules [around right to buy] need a complete overhaul so that they help, rather than hinder, our ability to build new council housing.
“This includes further relaxing the rules around the use of right to buy receipts, and removing all current restrictions on how different sources of funding can be combined.”
Across the UK right-to-buy homes re-sold since 2000 have made private individuals a collective £6.4bn profit, while more than a million people are on waiting lists for social housing.
A spokesperson for the Chartered Institute of Housing said: “We think the time is right to suspend it [the policy] to stem the loss of homes for social rent, which are often the only option for people on lower incomes.
“Not only are we failing to build enough homes for social rent: right to buy means we are losing them at a time when millions of people need genuinely affordable housing more than ever.”
Polly Neate, chief executive of Shelter, added: “The chronic shortage of social housing available is nothing short of a disaster. Hundreds of thousands are homeless and millions are struggling in deeply insecure and expensive private renting, so replacing social homes on a like-for-like basis is critical.”
Right to buy sell-ons: the national picture
Right to buy gives social housing tenants of two years or more the chance to buy their home from the local authority.
Properties are sold at between 35 and 70 per cent of the market rate, depending on how long the tenant has lived there.
According to the Land Registry, between April 2000 to March 2018 some 110,000 former council houses bought under right to buy in the UK were sold on.
Social housing in Britain has made private owners £6.4bn in collective profit, or £4.3bn in real terms - and £2.8bn in London alone.
The average time ex-tenants in the capital held onto their right to buy home was 2,400 days, or six and a half years.
But eight in London re-sold their ex-council home again within one week of purchase.
According to the latest government figures, less than a third of homes bought under right to buy in England since 2012 have been replaced.
In a statement, the Chartered Institute of Housing told the BBC the policy had effectively been “Britain’s biggest privatisation”.
Tenants who sell within five years should have to pay back some or all of their discount, and those who sell within 10 years have to offer their council the chance to buy their home back first.
The government is now developing a new version of the policy which would apply to more people.
Housing minister Kit Malthouse MP said: “Under right to buy, the government has helped nearly two million people achieve their dream of home ownership and we are working hard to make sure that everyone in the country who wants it has a shot at getting on the housing ladder.”