You know an article has really landed, for good or for ill, when your Twitter (sorry, ‘X’) feed starts sprouting third or fourth-degree of separation rows sparked by your original tweet, which you had muted days ago, and people start messaging you about how glad they are someone wrote it.
So it was with last week’s piece about the thorny question of social housing in inner London. Just as those studiously tenancy-neutral wonks suspected, ‘the hue and cry (slums! banlieues!)’ very much went up.
These arguments highlighted several important aspects of the debate. For example, if social housing is for people with ‘social value’, as one critic claimed, how is that value calculated, and how is that test applied to eligibility? What if someone who pays theirs their own way, and is currently getting screwed in the private market, also provides ‘social value’? Or is that impossible? Material enough for several pieces…
But the most common complaint (usually from people who gave no sign of having read the article) was the allegation that any policy of selling or redistributing social housing would amount to mass deportations or ‘social cleansing’.
Yet that need not be the case at all. The only policy I actually mentioned was Flexible Right to Buy, an idea floated by the Adam Smith Institute which happens to be both entirely voluntary and, in terms of its wealth transfers, eye-wateringly progressive. Consider the case for it in more detail.
Right to Buy gave council tenants the opportunity to buy their homes, at a discount. The idea was to help people transition from being state tenants for life into homeowners, with the freedom to improve their properties, sell them in order to move, and bequeath them to their children.
This represented a big transfer of both wealth and power from councils to their tenants, and has proved extremely popular. According to government figures from 2020/21, almost 2 million people have purchased their homes since Right to Buy was first introduced, 94% of them local authority tenants.
It has never been universally popular amongst policymakers. There are legitimate complaints that the proceeds of sales were not ploughed back into developing new housing stock. For some on the left, it represents the wrong sort of fiscal transfer – a capital investment that stands a citizen on their own feet, rather than an ongoing revenue expense for which a voter must be regularly grateful.
On the right, however, there is a broad consensus that it is a good policy. Yet it, like so much else, one that has been short-circuited by the housing crisis.
Why? Because house prices have spiralled so much that even with the maximum possible discount (£116,200 in London, £87,200 elsewhere), social housing tenants can’t possibly afford to buy their property.
This creates a perverse situation where people are effectively trapped in a property by the very fact that there is so much demand for it, even if they might otherwise want to move. After all, once you have a house for life, why ever would you let it go?
Flexible Right to Buy is a simple solution: social tenants are advanced cash, up to the value of their Right to Buy discount, to put towards the purchase of another property. As and when they buy and move, their original home is sold.
Given the huge and ever-growing disparity between the value of housing and the maximum Right to Buy discount, every sale would not just wash its own face but generate a huge surplus. According to the ASI’s original report:
“A conservative estimate of the impact would see 21,000 tenants take advantage of the scheme with £2 billion of discounts on £9 billion of stock and net receipts of £7 billion.”
Shelter claims there are over a million households currently on social housing waiting lists. Imagine how much could be accomplished if all or even a healthy share of that surplus (let alone the £62bn of the upper-end estimate) were invested in building new social stock outside the super-heated core of the housing crisis; not Middlesborough, necessarily, but not Zone 1 either. The average cost of a new affordable home in 2021 was £114,000, so it could yield tens of thousands of additional vacancies.
(There would need to be some sort of pan-London or even national framework to ensure that such profits weren’t locked into building new developments in the exact same bits of the city generating the revenues by serving pent-up private demand.)
For individual tenants, the advantages are obvious: they regain the option to escape a lifetime of state tenantry and become a homeowner, move to a different property that better suits their needs and tastes, and acquire an asset they can pass on to their children. It’s also a big, direct wealth transfer from government to themselves.
‘Option’ is the key word here: Flexible Right to Buy is entirely voluntary. Nobody has to sell their home if they don’t want to. But what if they do want to?
Apparently, one reason the Conservatives fought shy of this policy when it was first proposed was the fear of the inevitable accusations of social cleansing. And yes, Flexible Right to Buy would over time start to change the character of some communities, especially those with a high proportion of social housing and high demand for housing, such as parts of inner London.
Doubtless this would outrage the sort of people who rail against ‘gentrification’. But the objection has no merit. It would scarcely be the first social evolution such areas have undergone, nor will it be the last. Contra the delusions of Britain’s planning-brained rulers, you cannot fix a nation’s settlement patterns in aspic forever.
Again, such concerns seem to reflect the fact that Right to Buy reflects the wrong sort of progressive policy: empowering people to make their own decisions, rather than keeping them beholden to what pleases policymakers.
(Besides, how many progressives voicing such concerns would have the same sympathy for people complaining about an influx of new arrivals in outer London, the Home Counties, or indeed Middlesborough?)
One of the most frustrating things about Britain’s current travails is that there is a magic money tree: housing wealth. But politicians, and many voters, seem allergic to shaking it.
This is especially damaging because it is so often deadweight wealth. Money invested in stocks and shares supports wealth-creation and enterprise; money saved in a bank is loaned out for the same purpose.
In contrast, the wealth represented by the face value of your home might as well be buried under the patio. Unless tapped via equity release, it doesn’t circulate. It often doesn’t even benefit the owner; after all, if they sell it is usually only to buy another home whose price has been buoyed to a similar degree.
Flexible Right to Buy is not the only means by which government could, in theory, tap into the vast reservoirs of wealth stored under its property. But it is one that could be rolled out relatively easily, given that Right to Buy has been in place for decades, and operate on an entirely voluntary basis, supplying fresh housing where demand is greatest in the process. It is past time the Conservatives enacted it.
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