Local councils have called on the government to end the Right to Buy scheme for new council homes as they warned no change to council housing funding would end in tragedy.
Following Deputy Prime Minister Angela Rayner promising a “council housing revolution”, 100 local councils have warned the financial model for council housing finances is “broken”, with a £2.2bn “black hole” in councils’ dedicated budgets expected by 2028.
In a report led by Southwark Council, its leader Kieron Williams said: “Council housing in England stands at a crossroads. Carry on down the path we are on and an ever dwindling number of people will benefit from the transformative impact of a good quality council home. However, that tragedy is not inevitable.
“Without urgent action, councils will be tipped over the edge, as the costs they need to meet to maintain their council homes outstrip the income they have to pay those costs.”
The councils have called for a complete overhaul of the Right to Buy scheme introduced by Margaret Thatcher in 1980 that allows council tenants to buy their council homes at reduced rates.
Ms Rayner, who bought her council house through Right to Buy in 2007, announced at the end of July the government had started to review increased discounts introduced by the former Conservative government in 2012 and will begin a consultation into the whole scheme this autumn.
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Only 4% of homes bought under Right to Buy have been replaced, according to charity Shelter, while an estimated 43% of households living in private rented accommodation and receiving housing benefits are in homes bought under Right to Buy.
Tenants can currently get a discount of £75,000 outside London and £100,000 in London but the report calls for those discounts to be reduced and to be “more sensitive to geographic differences”.
They also want the government to ensure the sale of council houses under the scheme is “sufficient” for councils to replace homes sold to meet local housing needs.
Councils should also be allowed to keep 100% of Right to Buy receipts to deliver new or replacement social rent homes within 10 years, they said.
When it comes to newly built council homes, the group wants a complete block on them being purchased through Right to Buy.
And they want Right to Buy eligibility to be extended so buyers will have had to be a public sector tenant for at least 10 years instead of the current three.
The councils also want those planning to use Right to Buy to have new financial health checks to ensure they can afford the ongoing costs of owning a home.
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Also in the report, the councils said the previous government did not honour a 10-year deal agreed in 2012 that would have guaranteed rental incomes and costs were predictable.
They argue that despite being expected to “deliver on their side of the agreement”, policy changes by the government imposed new costs on councils and restricted crucial income.
They are calling for an emergency capital funding injection of £644m, which they say is equal to the income lost from council rents being capped from 2023-25.
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A Ministry of Housing, Communities and Local Government spokesman said: “We are facing the most acute housing crisis in living memory and that is why we are working at pace to reverse the continued decline in the number of social rent homes.
“The government has already given councils more flexibility to use Right to Buy receipts to deliver more social housing.
“This is on top of an additional £450m for councils to secure homes for families at risk of homelessness.
“We have made clear we will give councils and housing associations the stability they need and will set out further details at the next spending review.”
