Readers of this column will be bored rigid by my frequent denunciations of Help to Buy. My developer friends may well have taken me off their Christmas card lists but the fact remains that if you increase demand and supply remains constant, prices rise. It really is Rule 1.01 of economics
It has made some developers incredibly rich and has persuaded many young people to buy property at prices that will be hard to replicate once the property is sold on.
I have never been able to take the political leadership of MHCLG seriously as long as this sort of economic nonsense is allowed to survive, and given a number of recent pronouncements such as the infamous housing need algorithm or the new zonal approach to planning – both of which bit the dust almost as soon as they were trumpeted – I think my case is made.
Right to Buy, however, has never been promoted in the way it surely should have been by a government that believes, as much as it believes in anything these days, that most people want to own their own home.
Indeed, a major part of the success that the Tories are enjoying in traditional Labour areas is that the ambition to own a property that you can buy outright over 25 years and leave to your children is an ambition shared among people of every social and economic group regardless of race, religion or employment type.
The ambition to own a property is shared among every social and economic group
As Labour is increasingly seen as the party of students, radicals and the Champagne socialists of Camden and Islington, the Tories really are increasingly the party of the working class. Which is why it is good to see that not before time, the government now appears to be taking Right to Buy seriously.
The glaring deficiency in Thatcher’s original model was that sale receipts did not go back to councils. As far as she was concerned, the object was to empower more people to be part of a property-owning democracy. She mistrusted local authorities because for her, Livingstone at the GLC, Red Ted Knight in Lambeth and Derek Hatton in Liverpool were all the proof she needed.
The good news is that the new proposals allow councils to spend their receipts within five years rather than three. The new extended period will be backdated too, so they can spend money collected as far back as 2017.
Councils can also use 40% rather than 30% of receipts on new home-building so that they are encouraged to build more affordable homes, which is where the big gap is in the market.
Respondents to the government’s lengthy consultation had identified that at 30%, councils were finding it hard to build anything for social rent where those units almost by definition would not fund the 70% councils needed to find themselves.
One way councils have been using receipts in the past has been to just buy stock from developers. Apparently, 48% of replacement homes have been delivered this way so the cap will limit the percentage of Right to Buy homes that councils can acquire in any one year.
A new form of tenure called First Homes will be created that allows first-time buyers discounts of up to 30% on new-build properties compared with the local marketplace. And underscoring all these changes is the commitment to the ‘One for One’ replacement strategy.
For once, it is good to be able to report on a government announcement that might actually last more than a weekend. One that might actually address a real need in a sensible way and, in so doing, empower more people who might never have had the chance to do so, to enjoy what so many of us take for granted – the right and privilege of owning their own home.
Steve Norris is chairman of Soho Estates and Future-Built