Right to Buy

The Right to Buy scheme is a policy in the United Kingdom (with the exception of Scotland since 1 August 2016 and Wales from 26 Jan 2019) which gives secure tenants of councils and some housing associations the legal right to buy, at a large discount, the council house they are living in. There is also a Right to Acquire for assured tenants of housing association homes built with public subsidy after 1997, at a smaller discount. About 1,500,000 homes in the UK have been sold in this manner since the introduction of the scheme in 1980, with the scheme being cited as one of the major factors in the drastic reduction in the amount of social housing in the UK, falling from nearly 6.5 million units in 1979 to roughly 2 million units in 2017, while also being credited as the main driver of the 15% rise in home ownership, which rose from 55% of householders in 1979 to a peak of 71% in 2003 (though this figure has declined since the late 2000s to 63% in England specifically in 2017). The Right to Buy scheme is a policy in the United Kingdom (with the exception of Scotland since 1 August 2016 and Wales from 26 Jan 2019) which gives secure tenants of councils and some housing associations the legal right to buy, at a large discount, the council house they are living in. There is also a Right to Acquire for assured tenants of housing association homes built with public subsidy after 1997, at a smaller discount. About 1,500,000 homes in the UK have been sold in this manner since the introduction of the scheme in 1980, with the scheme being cited as one of the major factors in the drastic reduction in the amount of social housing in the UK, falling from nearly 6.5 million units in 1979 to roughly 2 million units in 2017, while also being credited as the main driver of the 15% rise in home ownership, which rose from 55% of householders in 1979 to a peak of 71% in 2003 (though this figure has declined since the late 2000s to 63% in England specifically in 2017). Supporters claim that the programme has given millions of households a tangible asset, secured their families' finances and—by releasing cash to repay local authority debt—helped improve the public finances. Critics claim that the policy compounded a housing shortage for people of low income, initiated a national house price bubble, and led ultimately to what is commonly recognised as the displacement and gentrification of traditional communities. Individual local authorities have always had the ability to sell council houses to their tenants, but until the early 1970s such sales were extremely rare. The Labour Party initially proposed the idea of the right of tenants to own the house they live in, in their manifesto for the 1959 general election which they subsequently lost. Later, the Conservative-controlled Greater London Council (GLC) of the late 1960s was persuaded by Horace Cutler, its Chairman of Housing, to create a general sales scheme. Cutler disagreed with the concept of local authorities as providers of housing, and supported a free-market approach. GLC housing sales were not allowed during the Labour administration of the mid-1970s, but picked up again once Cutler became Leader in 1977. They proved extremely popular. Cutler was close to Margaret Thatcher (MP for Finchley) who made the right to buy council housing a Conservative Party policy nationally. The policy was largely in place for the 1974 Conservative manifesto, but did not prove an asset in the two general elections that year because of high interest and mortgage repayment rates, as well as the growth of negative equity as house prices fell. In the meantime, council house sales to tenants began to increase. Some 7,000 were sold to their tenants during 1970; this soared to more than 45,000 in 1972. After Margaret Thatcher became Prime Minister in May 1979, the legislation to implement the Right to Buy was passed in the Housing Act 1980. Michael Heseltine, in his role as Secretary of State for the Environment, was in charge of implementing the legislation. Some 6,000,000 people were affected; about one in three actually purchased their housing unit. Heseltine noted that 'no single piece of legislation has enabled the transfer of so much capital wealth from the state to the people'. He said the right to buy had two main objectives: to give people what they wanted, and to reverse the trend of ever-increasing dominance of the state over the life of the individual. He said: '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 modernise 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.' The sale price of a council house was based on its market valuation but also included a discount of between 33% and 50% (up to 70% for council flats), to reflect the rents paid by tenants and also to encourage take-up. According to a government survey in 1988, the average discount that had been offered was 44%. Mortgages involved no downpayments. The legislation gave council tenants the right to buy their council house at a discounted value, depending on how long they had been living in the house, with the proviso that if they sold their house before a minimum period had expired they would have to pay back a proportion of the discount. The sales were an attractive deal for tenants; hundreds of thousands of homes were sold. The policy became one of the major points of Thatcherism. The policy proved immediately popular. Some local Labour-controlled councils were opposed, but the legislation prevented them from blocking purchases, and gave them half the proceeds. Sales were much higher in the south and east of England than in inner London and northern England. Sales were restricted to general-needs housing; adapted properties and those built specifically for older people were exempted from the scheme.