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7 July 2015

There’s never been a worse time to sell off council housing

Extending Right to Buy to housing associations is the wrong solution at the wrong time that will only make the problem worse.

By james Murray

Extending the right-to-buy to housing association tenants, particularly in the midst of a housing crisis, is exasperating. The fact the government intends to fund this by forcing the sell-off of council homes in high demand areas is absurd – not least in that it will exacerbate the very ‘housing exile’ of young people that the Communities Secretary was last week deploring.

Every day for the past five years since we won control of the council in ‘high-demand’ Islington, we’ve been trying to help people move into better housing and to build new council homes. Three thousand families in our borough alone, for instance, live in overcrowded council flats – they need somewhere better to live. And whilst developers are building thousands of market rate homes here, we need to make sure affordable homes and council homes are part of the mix too.

But what happens now? More than a third of our existing council homes and all the new ones we’re building could have to be sold off under the Conservative manifesto plans. Other boroughs, particularly in inner London, would see large swathes of their homes disappear on the open market too. And this dwindling of affordable housing in the inner city means lower-value areas in outer boroughs would see rents and housing benefit costs up, with public services under greater pressure, as people get forced out to somewhere they can (at least initially) afford.

When you start to think through the implications of the policy, it’s hard to believe the government are seriously going to do this. It’s arguably even more immediately damaging than right-to-buy – at least in that case, the tenant-come-leaseholder continues to live where they are for a while. With the forced sell-off, the effects of there being fewer homes will be felt from day one.

Play this out over just a few years, and our city that works socially and economically thanks to the mix of people in every part of town looks unrecognisable.

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Just to be clear what the Conservative manifesto pledges: councils will be forced to sell ‘high-value’ homes on the open market whenever they become vacant, with the money funding the new right-to-buy discounts, being spent on replacement properties, and going into a brownfield development fund. As you can see it seems rather over-committed already. The proposed definition of ‘high-value’ is regional, meaning there’s a single London-wide set of thresholds. With London’s house prices so out-of-control it’s not hard for property values, particularly in inner London, to exceed the proposed thresholds – defined as £400,000 for a two-bed flat for instance.

Councillors and MPs across the capital of different political stripes have been seriously alarmed by this policy, and so along with Camden, Haringey, and Enfield, we commissioned initial research at the time of the Queen’s Speech to look at its effects. The impact on inner city areas was stark: within these four boroughs alone 3,500 homes would be sold off over the first five years. And from day one new lettings would tumble – down by a third in Islington’s case – whilst councils could see their scope for building new homes effectively blocked.

Our research also exposed the huge problems for outer boroughs too, as any areas in the capital with relatively lower values would be forced to take the strain. With the sudden drop in council homes being let in inner London, pressure would quickly ratchet up on rents, housing benefit costs, and public services in outer London.

Furthermore the report sets out the serious difficulties over the government’s promise that any homes sold will be replaced. Given the ‘high-value’ thresholds, it would be virtually impossible to re-build in the areas where homes were sold. Moreover, the findings suggest no reason why the reality of the next few years will differ from what has happened in practice over the last few years – during which time a similar ‘replacement’ policy has delivered barely one new home for every 10 sold.

But whilst numbers set the scene, it takes a real example to show how truly perverse this policy’s effects could be. As reported by the Observer (June 28) these effects are laid bare on Lyon Street near Kings Cross, where right now we are building a block of 20 new council flats on the edge of the Bemerton estate, a 1950s/60s estate of around 700 flats.

Under our local lettings policy, the Lyon Street homes are set to be ring-fenced first for people from the Bemerton estate. Furthermore, we decided to designate these new homes for over-55s, and we designed the flats to be attractive for older people. Our hope has been that older people in larger flats on the Bemerton will move into these new homes, freeing up their existing flats for families who need more space.

We knew that this wasn’t going to be plain sailing – before the recent election, we were concerned about the impact of the existing right-to-buy. But it’s becoming increasingly clear that the government’s housing policies over the last five years have just been a warm up act for what is to come. Under the plans to force us to sell ‘high-value’ homes, this whole project and its goals could be scuppered.

A quick online search brings up a two-bed flat on the Bemerton (a leasehold property, bought previously under the right-to-buy) immediately opposite the Lyon Street flats on offer for £435,000. It’s fair to assume the new homes on Lyon Street would be worth even more on the open market, and so would certainly be above the government’s ‘high-value’ threshold of £400,000 for a two-bed flat. On that basis, the implication of the Conservative manifesto plans is that all these new homes would have to be sold immediately on completion. And it would also be likely that any people moving out of an old Bemerton flat would see their former home sold on the open market too.

All of a sudden we would have no rationale to build the new homes. If the older tenant left their existing larger flat, it would no longer be able to help a family living in overcrowding. All the benefits of a scheme like this fall away.

This is likely to be repeated across ‘high-demand’ areas of the capital: no new council homes would be built, and many of the existing ones will disappear whenever they become vacant. It simply isn’t possible to reconcile this policy with the Communities Secretary’s assertion last week that “if we want to maintain the chain of community – and a place for the next generation – then we must make sure we have the homes to welcome them to.”

We would see London’s mix of housing that prevents it becoming Paris – its social mix in every part of town that we are proud of and that it needs to work economically – rapidly decay. As the inner city is hollowed out, the strain on rents, benefit costs, and services would be felt in outer boroughs or beyond. Promises of replacement homes will prove once again to be easily broken.

We need to make sure people know how damaging this policy will be. It is a grave threat to what makes the capital strong – causing damage both immediately and in the longer run. We must stop it from wrecking our London.

James Murray is Executive Member for Housing & Development at Islington Council. He tweets as @jamesmurray_83.

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