What Boris’s right-to-buy gets wrong

It isn’t hard to understand why the government should want to revive the spirit of Margaret Thatcher’s right-to-buy, which was credited for creating a whole new class of homeowners – and in the process Conservative voters. While the right to buy has never gone away – and survived the Blair and Brown years – it is a shadow of its former self. In 2020/21, 6,994 social homes were sold, compared with 167,123 in the peak year of the scheme, 1982/83. Last year’s figure was markedly lower even than the 17,756 homes sold in 2006/07 – the heyday of the Blair housing boom.

The Conservatives have already tried to revive the scheme once, under David Cameron, but ran up against serious obstacles. First and foremost, the scheme struggles now because house prices have increased so dramatically in real terms that there are few council and housing association tenants who can afford to buy their home – even with the generous discounts on offer. If you live in a council flat in central London it is likely to be worth in excess of £400,000. Even if you qualify for the maximum discount of 70 per cent or £116,200 – whichever is lower – you are still going to have to find, or borrow, nearly £300,000. Right to buy, at least in pricey areas such as London, has become the preserve of tenants who arguably shouldn’t be in social housing in the first place – high-earners who have stayed in tenancies they acquired when they were much poorer, or perhaps have inherited tenancies from their parents.

What does today’s announcement do to widen the right-to-buy? Very little, on the face of it. The most eye-catching announcement is that in future, council and housing association tenants might be able to count income from benefits when applying for a mortgage. That is one thing to say, but as the shadow housing secretary Lisa Nandy has pointed out this morning, that will count for nothing unless mortgage lenders are prepared to lend the money. And they are likely to be extremely reluctant to advance what will be regarded as sub-prime loans without the government underwriting at least a portion of the loan – as the Treasury did for Help-to-Buy loans. Will taxpayers really appreciate being forced to take on this risk? I doubt it. Especially aggrieved will be those who are a little too well-off to qualify for social housing – and therefore the right to buy – yet who nevertheless are too poor to afford to buy a home on the open market. That is a class which didn’t really exist in the 1980s, when house prices were much lower than they are now, but which always gets left out when the government attempts to revive the right to buy.

But they might end up being the lucky ones. Buying a council or housing association property right at the moment – especially an older one – could turn out to be a poisoned chalice thanks to the government’s net zero policy. Under current plans, homeowners could be forced to upgrade their homes to at least a ‘C’ rating on an Energy Performance Certificate and to replace their gas boiler with a heat pump. These two things together could easily cost in excess of £20,000 for a bog-standard three-bedroom home. Where are benefit-claimants-turned-homeowners supposed to find that kind of money? There are some grants on offer, but unless the government relaxes its green targets, many in the right-to-buy classes may end up wishing they had stayed as tenants.