Right to buy: Former social housing in Redbridge sold off for tens of millions of pounds
- Credit: PA Archive/PA Images
Ex-council homes bought under right to buy in Redbridge have been sold off by private owners for tens of millions of pounds, new figures have revealed.
Between April 2000, when the Land Registry started keeping records, and March 2018, some 450 homes have been re-sold by the owners, making a combined profit of £63m.
Cllr Jas Athwal, the leader of Redbridge Council, has called on the government to have a “serious look” at the divisive policy, which was introduced in 1982 and allows long-standing tenants to buy their homes at a heavy discount.
He said: “It’s difficult enough to see much-needed houses and flats lost forever to right to buy. We already have far fewer council homes than neighbouring boroughs and have lost many properties to this scheme.
“But my heart sinks when I see data like this. There’s something wrong when people are making huge profits by quickly selling on properties bought at below market prices.”
Since 2000 people in Redbridge re-selling council dwellings have made an average profit of £92,853 each – and in many cases hundreds of thousands of pounds more.
Fourteen homes were bought from the local authority for less than £25,000 and were later sold on for a total of £1.7million.
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The cheapest, a property bought for just £15,000 in April 2000 was sold in April 2007 for £125,000 - more than 10 times its original value under right to buy.
On average former council dwellings acquired through the policy in Redbridge were sold on by former tenants just under six years later.
But many changed hands again rapidly after the purchase, with 21 re-sold by former tenants within a year.
One home bought on September 5, 2002 for £120,000 was sold four months later or £195,500, effectively making a profit of £554 every day it was held onto.
And as house prices have soared across London, former social housing in Redbridge has been sold on for hundreds of thousands of pounds more than the original purchase price.
A property bought for £33,800 in May 2001 was sold for £225,000 in November 2015, while another valued at £174,000 was sold for £510,000 in May 2018.
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.
Aspokesperson 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: “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 Redbridge there were 5,408 households on the waiting list for social housing in the borough at the end of 2017/18.
Last October the council was unusually allowed to “reinvest” the £23m it had amassed from right to buy receipts over 10 years into housing, and received £20m in funding towards new builds from City Hall.
Over the previous decade, Redbridge lost 2,607 once publicly-owned houses and flats to right to buy.
Cllr Athwal said: “Right to Buy takes money away from councils who are strapped for cash and from residents who desperately need it. The government needs to have a serious look at the issue.”
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 in the UK 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”.
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 it back first.
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.”