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Margaret Thatcher was elected as Prime Minister in May 1979 with the ‘Right to Buy’ promise that Britain would become a property-owning democracy.
The Right to Buy, previously an option for Councils, now became a right for almost all tenants that were not in arrears with their rent accounts and were not in accommodation that had been built to provide homes with special provision for people with physical or medical conditions which meant they could not be accommodated in general needs housing.
Generous discounts, based on length of tenancy, provided an incentive and many people for whom home ownership was a dream, joined the property-owners elite.
Some people did not believe that homes publicly-funded should be disposed of, whilst others bought into the idea of tenants buying their homes, living there until death and then handing them on to the next generation. The only requirement of a purchaser was that if they chose to move, or sell the property within 5 years, the discount must be paid back in full or part. But surely, this would only apply to a very few? How wrong could it be?
The answer is – very. As the 5 years neared the end, more and more of these formerly publicly owned properties came on the market and were sold to private sector landlords, enabling the former tenants to move to homes nearer children, or work.
This was doubtless anticipated, that there would be a free movement, of people able to move where they wanted. Mixed tenure estates were expected to raise standards as owners showed respect for their homes and improved gardens. Fears were expressed that social housing with rents at one level and private rented housing with perhaps double the rents would create tensions, but as social housing rents increased, and housing benefit levels stayed the same, they approached each other, and it did not become much of an issue in many areas.
That is clearly not the case in Southwark, where the Labour Council will force those who have bought properties under Right to Buy to limit the rents they charge to ‘affordable’ in the future.
Whilst this will delight ‘Generation Rent’, it is another burden on landlords. They did not buy these properties knowing that their rental income would be limited. Will this persuade some to relinquish their place in the market?
Would this have an impact on, or is it the result of, The Freedom of Information Act statistics gained from contacting over 100 local authorities. 23 of them disclosed that they have spent thousands of pounds leasing back homes that they formerly owned to use as temporary accommodation for the homeless. Southwark (remember – Southwark will force affordable housing limits on landlords) is one of the authorities that rents 93 ex-council flats, at a cost of £1.36 million per annum. A calculation of 1.36m divided by 93 gives a cost of £146,236 per unit, per year.
There may have been the best of intentions behind Right to Buy and thousands will bless the Thatcher Government for an opportunity they had never dreamt of, but the long-term results have been devastating. Enfield Council rents 130 ex-council flats at a cost of 1.8 million per annum. Cabinet member for Housing and Regeneration, Ahmet Oykener said ‘Without the Right to Buy, we would have more than 20,000 properties, we would have no crisis in Enfield and would be able to house homeless households’.
Landlords who legitimately bought properties need to join associations, accreditation schemes and make themselves aware of what local authority concerns are and the actions they may take; if you have set a rent that reflects the good standards of a property and the amount you have spent on it, you should not be forced to lower the rent to become what the local authority deems affordable.
After all, it is your money invested in the property, your risk. The same cannot be said of the local authorities who are working with our money.
For advice on buy to let issues – General Knowledge