Havering Council has defended the right to buy policy as it emerged former tenants in the borough have made a £91m profit from selling on ex-council homes.
Havering Council has defended the right to buy policy as it emerged former tenants in the borough have made a £91m profit from selling on ex-council homes.
Between April 2000, when the Land Registry began keeping records, and March 2018, some 618 homes bought under the scheme in Havering have since been re-sold.
Many were re-sold for more than ten times what they were bought for under right to buy.
The controversial scheme, introduced in 1982 under Margaret Thatcher, gives long-standing tenants the chance to buy their home from the local authority at a heavy discount.
But Cllr Joshua Chapman, Havering’s cabinet member for housing, repeated that right to buy was “an essential scheme”.
He added: “As with any sale on the private housing market, once a home has been sold through the right to buy scheme, the council has little say over what happens to that property.”
Since 2000 the re-sale of ex-council dwellings has earned owners an average profit of £75,944 - and in many cases hundreds of thousands of pounds more.
Seventy-six properties were bought from the local authority for less than £25,000 and were later sold on for a total of £8.4million.
One property bought for just £7,000 in December 2000 was sold in January 2014 for £115,000: more than 16 times its cost under Right to Buy.
Three others bought for between £7,500 and £9,500 between 2001 and 2003 were later sold on for £80,000 each.
On average properties changed hands six and a half years later after they passed out of council ownership.
But a handful were sold on much sooner, with one re-sold for £400,000 just 67 days after it was purchased from the council.
A property bought for £13,350 in April 2007 was sold for £167,500 just three months later, effectively generating a profit of £1,389 every day it was held onto.
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.
In recent years there have been calls for the policy to be halted or scrapped outright in England, as it has been elsewhere in the UK.
A spokesperson for the Chartered Institute of Housing said: “We think the time is right to suspend it 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: “While right to buy has helped some people to get on the property ladder, it’s stored up serious trouble for the future.
“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.”
In Havering there were 2,234 households on the waiting list for social housing at the end of 2017/18.
Last month it was revealed that a total of 9.6 percent of social housing bought under right to buy has ended up in the hands of private landlords, with Havering Council paying £3m a year to rent 316 of these homes back as temporary accommodation.
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.
Cllr Chapman added: “The statistics don’t tell the full story. Every housing case is different, and we must also consider the length of time as a council tenant and the market value of the property at the time of purchase and sale.”
Right to buy: 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 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.
The current rules mean councils can only use receipts from right to buy sales to fund 30 per cent of the cost of a new home.
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”.
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.”
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