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From Right to Buy to Buy to Let Matthew Warburton - 14/01/2014

ForSale300At least 36% of homes sold under the Right to Buy are now let by private landlords, claims a report published this week by Tom Copley AM, Labour's housing spokesperson in the London Assembly. Compiled from responses to Freedom of Information requests, the report refers to RTB sales in London only.

 

Copley counted the proportion of council leaseholders in each borough registering an "away" address - suggesting that they were not themselves resident in the property because they had let it to tenants.

 

In Tower Hamlets the proportion of such leaseholders was over 50% and in Enfield only slightly less; in Kensington & Chelsea, Barking and Dagenham, Ealing and Kingston it was over 40%, with the lowest percentage - 24% - in Brent.

 

The Right to Buy has been in operation for over 30 years, so it is not surprising that a significant percentage of sold homes are no longer occupied by the tenants who bought them. But it is striking that such a high percentage should have been sold on to private landlords rather than owner-occupiers. 

 

Anecdotal evidence suggests that ex-RTB flats are attractive investments for Buy-to-Let purchasers because they are generally in a good state of repair and councils, as freeholders, can generally be relied on to keep the structure and common parts well-maintained.

 

Copley says that 36% may be an underestimate of the number of homes now let privately because there is no requirement for non-resident leaseholders to register an "away" address and many may not. On the other hand, it should be pointed out that his figures relate only to Right to Buy homes sold on long leases - that is, with a few exceptions, flats and maisonettes. Houses sold freehold are not included, and it may be that these are, by and large, more attractive purchases for owner-occupiers.

 

There is no easily accessible data on rents charged specifically for ex-council flats or the proportion of them let to tenants on benefits, but private rents as much as £100 a week more than council rents for similar properties are not unusual.

 

Where low income tenants are forced to rely on private lets because councils cannot make social housing available to them, the impact on benefit spending, though difficult to quantify, is undoubtedly substantial.

 

Copley makes a number of recommendations, including proposing that future RTB sales should be subject to a binding covenant that the property remains in owner-occupation. But the fundamental problem remains the shortage of new council homes - Buy-to-Let landlords are taking advantage of a sellers' market that exists because of the shortage of social rented housing.

 

An alternative approach would be to revisit the current arrangements for RTB replacements to ensure that councils are enabled to at least replace sold homes on a one-for-one, like-for-like basis, and, wherever necessary, to build additional homes to meet local demand.

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