Councils spending millions renting back Right to Buy homes

London councils are spending more than £22m each year renting back homes sold off under the Government’s controversial Right to Buy programme, according to a new report.

The report by Labour’s London Assembly Housing spokesman, Tom Copley, claims at least 54,000 homes sold under Right to Buy in the capital are now being rented out privately.

According to Mr Copley’s report, at least 2,333 Right to Buy homes are now being rented by local authorities, with the London borough of Newham alone renting back 808 of these at a cost of £12.9m million per year.

The report estimates the total yearly cost to councils renting back these properties is at least £22,345,760. Westminster City Council is renting back 650 former council homes, but couldn’t provide a figure for the annual cost of this.

Based on the average cost of renting back council homes across London this could be in excess of £8 million a year.

In 2012, the Government decided to ‘reinvigorate’ Right to Buy, increasing the discount on council homes to £75,000 across England. The following year the discount was increased to £100,000 in London. The Government promised one-for-one replacement, within three years, on any additional homes sold due to the increased discount.

By March 2018 the Government were falling behind on this pledge. Nationally, since 2012, 17,072 additional replacements were required, but the number of homes started or acquired was below 16,000.

The Mayor of London has pledged to start 11,000 new council and Right to Buy replacement homes by 2022. He has also introduced a new ‘ring-fence offer’ for London councils to protect their Right to Buy receipts.

But the report adds in order to meet the need, some councils are buying back homes they had previously sold under the Right to Buy. Ealing Council, for example, has bought back 516 former council properties. Whilst more than half of these were for regeneration projects, Ealing found themselves spending £107,071,333 buying these back – more than six times the £16,230,470 they received through the original sales of these homes, which were discounted by a total of £15,648,455 under the Right to Buy.

‘Something has gone very wrong when tens of thousands of homes built to be let at social rents for the public good are now being rented out at market rates for private profit, sometimes back to the very councils that were forced to sell them,’ said Mr Copley.

‘The Right to Buy is failing London and should be abolished. Home ownership is still important for many people, but it can’t come at any cost, particularly if it means families struggling to put a roof over their heads or living in poor conditions. It’s not right that cash-strapped councils are having to fork-out eye-watering amounts renting back properties they were forced to sell at a discount.

‘Many councils are building new council homes again for the first time in a generation. But we risk treading water or even going backwards if we continue to lose precious existing homes to Right to Buy,’ he added.

‘At a time when the need for homes at social rent level far outweighs the numbers being built, it’s reckless to continue to force the discounted sale of council homes.

‘At the very least, we want to see the Government exempting newly built council homes from the Right to Buy and legislating to prevent Right to Buy homes being let on the private market. But with councils fearing their investment in social housing could be wasted, and the Right to Buy adding to London’s housing crisis, abolition is the best way to protect the capital’s social housing stock.’

Mr Copley’s full report – Right to Buy: Wrong for London – is available to read here.