New research has for the first time revealed that at least 36% of homes sold through Right to Buy in London are now let by private landlords, with 31% in Westminster.  The information was released in a new report released today From Right to Buy to Buy to Let. 

Today’s report highlights the financial cost to taxpayers and local authorities of the Right to Buy, including increased welfare spending due to the higher Housing Benefit payments being paid to tenants in ex-council homes that are now charged at market rates. In some London boroughs, average Housing Benefit claims are as much as £100 a week – £5,200 a year – higher for private sector tenants than for council tenants. 

The report also highlights that local authorities are now frequently forced to rent former homes back at higher market rates in order to discharge their statutory homelessness duties. 

The report calls for urgent action to reform Right to Buy to alleviate some of the worst excesses caused by the policy in its current form. 

The report’s recommendations include: 

• Mandatory covenants on all Right to Buy properties so they cannot be let through the private rented sector.
• The current system of discounts should be abolished.
• A new system should be introduced whereby local authorities retain an equity stake in any property sold.
• Local authorities should have a ‘right not to sell’ if it is not in the community interest to do so or if they believe it would harm their housing operations.
• Replacement homes built with Right to Buy receipts should mirror the rent, size and tenure specifications of the home sold 

Murad Qureshi AM, Labour London wide Assembly Member, said:

“The report shows for the first time that Right to Buy, a policy ostensibly about helping aspiring home owners, has led to tens-of-thousands of London’s former council homes being rented out by private landlords. In Westminster the report shows that at least 31% of former council properties sold under right to buy are now rented out privately. This has helped to fuel the increase in the housing benefit bill, heaped more pressure on local authority waiting lists and led to more Londoners being forced into the under-regulated private rented sector. 

“This shows that Right to Buy is poor value for money to taxpayers. Not only did they pay to build the home in the first place, they then subsidised the considerable discounts offered to tenants and then missed out on the rental income that would have covered the build costs. Now, we have the indignity of London boroughs renting back their former council homes at higher market rent levels, once again costing taxpayers through the nose. 

“Right to Buy has played a central role in causing and exacerbating the current housing crisis. Future governments must recognise that the right of a council tenant to buy their home at a discount, subsidised by other taxpayers, cannot be at the expense of the right of the vast majority of people to have a decent, affordable home to live in.” 

Physical conditions in London’s private rented sector are worse than any other tenure of housing, while complaints against private sector landlords have increased by 47% since 2008. Median private sector rents increased by 12% in 2011 and 9% in 2012. 

Ends

 Notes 

1.  Murad Qureshi AM is a Labour London wide Assembly Member 

2. A copy of the report, From Right to Buy to Buy to Let is attached. 

3 . Freedom of Information requests made to council found that of the 8,910 leaseholder properties where the council owns the freehold, 2,762 were likely to be rented out by private individuals or companies. Because councils do not maintain records of homes where the freehold has been sold, this study has used the leaseholder information as a data pool to calculate an overall proportion of former council homes now rented by private landlords. Because there is no statutory requirement on landlords to register an away address with the local authority, this figure is likely to be an underestimate. 

4. Reference for the above data on physical conditions in London’s private rented sector is taken from: ‘Rent reform: Making London’s private rented sector fit for purpose’, London Assembly Housing and Regeneration Committee, June 2013:http://www.london.gov.uk/sites/default/files/Rent%20Reforms%20-%20Making%20the%20Private%20Rented%20Sector%20Fit%20for%20Purpose%20Final.pdf