The Heywood Foundation Public Policy Prize has got me thinking about some of the big problems facing our society. The prize is explicitly COVID-19-related, so this issue doesn’t fit there, but this is something I’ve had in my head for a while, so I thought it worth putting into the world.
England has a well-established housing crisis. In 2018, there were over 1 million households on social housing waiting lists in England and Shelter has estimated that over three million additional homes need to be built, in order to meet demand over the coming two decades.
The “Right to Buy” scheme, introduced in 1980, has helped a significant group of council tenants to buy their homes, through offering significant discounts to commercial pricing. It has also proven very popular and (therefore), hard to abolish. However, it has not incentivised councils to increase housing stocks. Instead, between the 1970s and 2010s, local authority house building fell from hundreds of thousands per year to just thousands. This has made it all but impossible to meet England’s housing needs, particularly for people on low income, in turn causing the cost of housing benefit to rise to £22 billion.
In order to address these problems, “Right to Buy” could be redesigned, so that tenants do not have an absolute right to buy their homes after three years, but rather a “Right to Apply”. This would work as follows:
Tenants could apply to buy their council home, with much the same requirements as are currently in place. However, after applying, they would not immediately be able to complete the purchase. Instead, they would be placed on a waiting list (similar to the existing waiting lists for access to council housing). They would only be able to complete the purchase after the local authority had brought into use new housing, with capacity of at least one additional bedroom, thereby increasing overall housing stock, and modernising it at the same time. Once this requirement was met, the tenant’s property would be released for sale, and the next tenant would move to the top of the list.
For example, if the tenant wanted to buy their two-bed property, the council would need to complete at least three beds worth of property, which could remain part of the local authority housing stock. This could be formed of one three bed property, or a two bed and a one bed, or three single bed properties (or more), dependent on local need and in line with local housing plans. Any single new property could, if sufficiently large, count towards releasing multiple older properties for sale (so that local authorities were not disincentivised from building larger properties where those are needed).
In order to provide the finance necessary, local authorities would need greater powers to borrow money for capital investment. In an era of near-zero interest rates, this would be entirely affordable.
Finally, in order to prevent the build-up of long “Right to Apply” waiting lists, there would be both a “carrot” and a “stick”. The “carrot” is simple – local authorities would be able to retain all receipts for the sale of properties. The “stick” is more complex – a threshold would need to be set for the length of the waiting list, based on prevailing rates of “Right to Buy” sales in the local authority. When the list exceeded that level in any given year, the authority would be fined a certain amount, in proportion to the scale of the threshold breach.
Taken together, these reforms might be realistic, practical in policy terms and achievable in political terms. Maybe.