'Right to buy; Dave's goody bag!

‘It was the day the Conservatives launched their manifesto and revealed a planned extension of the right to buy’, trumpeted the Telegraph. except nothing was ‘revealed’. The policy was publicized in January, and has been the subject of a tidy amount of media comment, especially from sniffy hacks in their suburban villas. ‘Extending the right to buy is economically illiterate and morally wrong’ wrote one double-barreled woman. The lower orders should know their place, eh?

Try telling that to any of the nearly 2 million tenants who benefitted from Maggie’s  opportunity to get out of council tenancy and into home ownership. Together with the preferential sale of shares in privatized industries to small buyers, it was a major shift towards the ]property owning democracy that was one of her core beliefs.

There were two main criticisms of the original scheme; that valuable assets were sold below their market value or replacement cost, and that the houses largely fell into the hands of buy-to-let operators and ended up being tenanted again but at higher rents.

There is some justification in the first. A major doctrinaire error was to forbid councils from reinvesting the money in new build. It could only be used to reduce the debt on the housing account.

There is little evidence to support the second point. It is likely (but unproven) that property companies bought up the appalling 1960’s tower blocks and renovated them to become desirable down-town accommodation. It is noticeable that horror stories about ‘slum towers, hotbeds of crime’ have not been seen for many a year.

What is conveniently forgotten is that there was a moratorium on selling within five years of purchase. There was no ‘fast buck’. In addition, the latest scheme requires a new rental to be built for every house sold.

The discounts took into account the length of time the tenant had occupied the house so as to recognise the rent paid over the years. The discounts were probably too generous and still are, at 60% for a house and 70% for a flat. Maggie though so, but lost the argument in Cabinet.

It is said that the sale of Housing Association properties will make the housing shortage more acute. But this is wrong. The housing shortage is not supply led; it is demand led.

And the main reason for this is immigration.

Between 1991 and 2011 the immigrant population of the UK rose by more than 4 million.

Be that as it may, Cameron is going to find privatizing 1.3 million Housing Association properties a rather more complex task than with Council houses.

Housing Associations are private, not-for-profit entities. Some careful legal drafting will be needed. Some key questions will need to be answered.

What will be the discount? Or the purchase price? Will the valuation yardstick be market value, building cost or asset value in the capital account?

Will the Associations be bound by the 2012 requirement – sell one, build one? If so, how is this to be funded when the discount will mean a shortfall between the purchase money and the new-build cost? What will be the cost to the tax-payer?

As to the justification for the policy, back in 1980, Michael Heseltine put it very well: "There is in this country a deeply ingrained desire for home ownership. The Government believe that this spirit should be fostered. It reflects the wishes of the people, ensures the wide spread of wealth through society, encourages a personal desire to improve and modernize one's own home, enables parents to accrue wealth for their children and stimulates the attitudes of independence and self-reliance that are the bedrock of a free society."^[4]

Janet Daley in the Telegraph said of potential buyers  ‘It is fundamental to their understanding of themselves and their possibilities: they are no longer grateful supplicants who are being provided with a home by a charitable authority. They are fully-fledged, self-determining grown-ups who are willing to take responsibility for their own little piece of the community’.

The main difference between the Thatcher policy and Cameron’s is that hers was principled. His is opportunistic.