At this week’s Tory Party conference in Manchester, Cameron will announce a new right-to-buy scheme. Council tenants will be able to buy the house which they rent, and this is replaced by a newly-built council house. At first sight, this looks good.
Details are sketchy. Baroness Warsi has spoken of building these houses on government-owned surplus brownfield land, such as the DEFRA site in Guildford. She speaks as if these houses will be owned by the Government, which seems unlikely. They are more likely to be council houses owned by local authority (LA). Another issue is the role of registered social landlords (RSLs). Many LAs have no council houses. They have been transferred to RSLs, who repair and maintain them, and collect the rent. Does the right to buy apply to RSL properties?
Let’s leave such details to one side. What will actually happen? A council house is
sold at, say, 80% of its market price to its tenant. There might be some doubt as to whether a council tenant could get a mortgage deposit and repaymenst even at 80%, but perhaps they will. And a new council house has been built – by house builders, who have been paid. So what’s the net effect?
A new house has been built and paid for, as a result of the government subsidy. Who received that subsidy? The house builder. So this is the Holy Grail for Bellway and Taylor-Wimpey. A way of selling more houses, whilst maintaining house prices. The net effect is that the Government -actually the taxpayer – is paying Taylor-Wimpey so they can sell new houses and yet maintain current absurd house prices.
Its a neat trick. But its still a trick.
