Right to Buy, Right to Strife

Heygate Estate, south London © Paul Coleman, London Intelligence 2012

Right to Buy represents a transfer of public wealth from society to the market, writes Paul Coleman.

Thatcherism’s flagship policy liberates capital whilst collectively oppressing working people. Right to Buy, established by the Conservative Prime Minister Margaret Thatcher in the 1980s, allows tenants to buy and sell at a profit the council homes they rent from their local authorities. Buyers are enticed in the shape of a sizeable discount funded by taxpayers, including those who live in council homes.

The state held about one third of British housing by 1980. But in that year Thatcher offers tenants the ‘right’ to buy council homes at discounts ranging from 33% to 50%, helped by 100% mortgages.

Thatcher’s political career ends in 1990. (She dies in 2013). But Thatcher’s political successors, John Major, Tony Blair, Gordon Brown and David Cameron, perpetuate the dogma of Right to Buy. Hence, the 21^st century political establishment and local state still offers Thatcherism’s flagship Right to Buy policy as a means for Londoners individually to acquire a home raided from the public housing stock owned collectively by the public. (Scotland ends Right to Buy in 2016).

Seductive policy

Most council tenants though live in flats not houses. But Thatcherism’s parrot phrasing of the ‘right to buy your council house’ continues long into the 21^st century, adding to the seductive suburban glow of this policy, contrasting it with a proletarian, urban stigma cultivated by politicians and media against council flats and council tenants.

Part of Thatcherism’s hidden agenda includes a belief that home ownership would incline ex-council tenants to vote Conservative. A Conservative local political leadership in the City of Westminster pursues this ‘gerrymandering’ agenda nakedly during the 1980s – increasing the number and targeting the location of council homes designated for sale under Right to Buy with the main aim of helping the party to win local elections.

The Westminster debacle ends in the courts but does not threaten to end Right to Buy itself. Sales of council homes are fastest in London and slowest in the largely de-industrialised north of England. Buyers tend to be disproportionately middle-aged and better off with family breadwinners in skilled manual or white-collar jobs.

Councils gradually lose their share of sales income. Thatcher eventually denies them the right to use sales receipts to replace sold-off council homes. Councils lose rental incomes and so put remaining rents up.

Just 2,328 council flats and maisonettes were sold in England when Right to Buy was first introduced in 1980. That rises to 105,199 in 1981-82 and peaks in 1982-83 when 167,123 are sold. In the following years, many of these new leaseholders rent out those homes privately for rents much higher than council rents.

Central government receives a significant financial windfall from Right to Buy sales, helping to supplement revenues from North Sea oil. Council home sales generates £692m in 1980–81, £1.39bn in 1981–82 and £1.98bn in 1982–83. Over £40bn income is generated in the first 25 years of Right to Buy but the money is never used for building new council homes.

Hyper-commodification

This ‘right’ might have had neutral consequences but politicians refuse to allow local councils a corresponding right to use receipts from council house sales to replace the tens of thousands of such homes lost through Right to Buy to the market.

In this way, Thatcherism consciously undermines the creation and reproduction of subsidised council housing for working class Londoners. Right to Buy, and other forms of the increasing hyper-commodification of London land and property, has almost eliminated the building, repair and renewal of council housing. In the second decade of the 21^st century, fewer tenants pay subsidised rents to a public housing authority.

Extensions to Right to Buy

In April 2012, major extensions are made to Right to Buy. Maximum discounts increase from as little as £16,000 in some areas to a maximum of up to £77,900 across England – and to up to £103,900 in London. More than 33,000 households are seduced to take up their Right to Buy option as discounts increase.

In 2016, politicians extend Right to Buy to housing associations tenants – by legislating housing associations must sell their stock to individual tenants who want to exercise a new ‘right to buy’. Worse still, the subsidy for these homes must come from money taken from local authorities that are required to sell off their most valuable council homes. Council homes are once again lost to the private market – this time, to allow housing association tenants to buy their rented homes. Housing associations wilt in the face of this pressure and agree to pilot the scheme in 2017.

After 36 years of Right to Buy, a government finally says money raised through extra sales can now go towards building new ‘affordable’ homes for rent. But this comes decades too late. By 2016, a staggering 1.87 million homes have been lost in England under Right to Buy since 1980, according to government figures.

Right to Buy proves to be a successful form of naked free market capitalism – creating a false want and then satisfying this new demand by taking homes from the stock of public housing. Right to Buy purchasers then become leaseholders – and many become landlords.

They become responsible for all the increasingly substantial costs of maintaining their newly purchased home, including routine and major structural repairs and improvements. They incur service charges that increase each year. They also have to repay the whole discount if they sell within the first year of purchase. They can sell their Right to Buy home without repaying any of the discount five years after their purchase.

And, being a Right to Buy leaseholder of an ex-council home in the 21^st century does not prevent local councils from slapping compulsory purchase orders on these properties – and paying leaseholders inadequate compensation, such as the Heygate and Aylesbury leaseholders in south London (above photo) – in order to enable developers to demolish a council estate and redevelop it with private luxury and ‘affordable’ homes that Right to Buy leaseholders themselves cannot afford.

But it is working people who pay the biggest price for Right to Buy in terms of lost council housing stock and rent revenues. Vast swathes of council flats sold through Thatcherism’s ideologically driven Right to Buy end up in the hands of private landlords between 2010 and 2017. Estate agents chase wealthier private buyers to purchase ‘ex-local authority’ homes in London’s overheating real estate market.

Right to Buy also creates a new ideological and cultural shift – by denigrating the noble idea of public housing and helping to stigmatise council homes and council tenants.