Towards the end of 1979, Michael Heseltine unveiled a policy which he claimed would lay “the foundations for one of the most important social revolutions of this century”. Heseltine, then Margaret Thatcher’s environment secretary, announced the government’s plans to give council tenants the right to buy their homes at a discount. It is not an overstatement to say that his announcement has irreversibly damaged the British housing market.
Heseltine was right that Right to Buy would spark a social revolution, though perhaps not of the kind he intended. The introduction of this policy came off the back of more than a decade of prolific housebuilding in the UK. The efforts of Harold Wilson’s government had seen the proportion of council housing rise from 42 per cent to 50 per cent of the total and saw the construction of 400,000 houses a year. Right to Buy undid a lot of that work.
This “social revolution” has seen the sale of two million council homes since 1980, many of which have not been replaced. This has been accompanied by a steady decline in council housebuilding in the four decades since; in 1980, 94,140 new social homes were built. According to the Regulator of Social Housing, in the year ending 31 March 2024 the UK built just 700 social homes. For comparison, in 2022-23, the UK sold off 14,085 social homes through Right to Buy schemes.
Part of this is because, up until 2023, councils were required to give 25 per cent of the funds generated by the sale of a council home to the Treasury. Another is that any home sold through Right to Buy is sold at a discount. This means council properties were sold off for less than their actual value, with local authorities only permitted to keep 75 per cent of the money. It makes sense, then, that their programmes of replacement failed to keep up. This is a loss making exercise for the council.
As a result, the UK’s social housing stock has shrunk, making waiting lists longer and pushing prospective social tenants into the increasingly extortionate private rented sector. The loss of properties has meant many households, who would be entitled to a social property, are sometimes spending inordinate amounts of time living in temporary accommodation. For some families, this can mean a prolonged period of living in a B&B or basic hotel.
This is expensive for the state. According to the UK Housing Review’s autumn briefing, government spending on housing is at its highest with £30.5bn spent in 2021-22 compared to £22.3bn in 1975-76 in real terms. In the 1970s, towards the tail end of Wilson’s government, 95 per cent of this money was spent on housebuilding. Now it is only 12 per cent with the rest taken up by housing benefit. This basically amounts to a state subsidy of landlords.
The government is clearly alive to the damage wreaked over the course of Right to Buy’s 45-year history. On Wednesday, Rachel Reeves confirmed the government would allow councils to retain 100 per cent of Right to Buy receipts (a policy trialled and scrapped by the previous Conservative government). She also confirmed a reduction in the Right to Buy discount. But while these policies may be a salve, they are no silver bullet.
The Labour frontbench seems reticent about scrapping the policy in its entirety. In an interview in 2022, Matthew Pennycook, now the housing minister, said “we need to turn the tap off on right to buy” but caveated “I’m not sure that requires you to abolish it”. Angela Rayner, who herself purchased a property through Right to Buy, has also remained coy on the issue. Speaking to Laura Kuenssberg in September said she wanted the policy to continue but that it needed to be “fairer” to the taxpayer. The defence pitted by most Labour ministers is that working class social housing residents should retain the right to purchase their homes.
But not everyone is this equivocal. In Manchester, Andy Burnham has gone one step further. In May, the city’s mayor called for a suspension of Right to Buy after claiming it was the reason the housing crisis had “got worse every year”. Kwajo Tweneboa, a vociferous social housing campaigner, has also called for the policy to be scrapped. He described the scheme as “the most damaging policy introduced in respect to social housing”.
It is difficult to see how this government – or how any government – can advance a successful social housebuilding programme with Right to Buy still in operation. The policy makes a sieve of the UK’s council housing stock: councils are simply unable to match the rate of replacement to the rate of sales. Perhaps getting rid of Right to Buy is, like many others, a tough decision the government is not yet ready to take. But the fault lines of this policy are clear: keeping it may save votes, but it won’t save money. And while it remains, the housing crisis will only intensify.
[See also: Rachel Reeves’s great gamble]
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