Residents of Leicester have exhibited outrage after plans were released by Leicester City Council earmarking a £400’000 fund that might be used to buy back Leicester council houses which were sold under the Right to Buy scheme, a popular scheme introduced by the Conservative government, led by Margaret Thatcher in the Housing Act 1980 as one of the major reforms needed to get Britons back on the housing ladder.
Over the last three years, the Labour-run council led by Peter Soulsby has bought more than 800 ex-council homes back, this is after the government extended the Right-to-Buy policy to housing association tenants, fulfilling the 2015 Conservative Manifesto pledge by David Cameron who, democratically held a referendum he didn’t agree with.
However, the Labour council says “Right to buy has contributed to the lack of affordable housing”.
Councils are allowed to use a limited portion, up to 50%, of the money it earns from selling houses to pay up to half of the cost of buying back homes it previously owned, this is designed to actually prevent councils from buying homes back that they have sold unless there is a real crisis that cannot be solved by alternate means; the theory is that councils should build affordable houses and not buy houses back at inflated market values compared to when they were sold costing the taxpayer up to £100’000 or more per property the council buys back.
Using the buy-back allowance instead of building affordable homes adds to the housing crisis and is opposing the government plans to build 300’000 new homes per year by instead buying back properties instead of building them. Building new, affordable housing would be cheaper than buying back ex-council properties, especially when we take into consideration the subsidies handed to multi-national companies like Sowden when our mayor, Peter Soulsby, sold the freehold of the ex-council offices for just £24’000 when it was worth upwards of £3million when compared to similar sized plots outside of the city centre with estimates ranging upwards of £9million for the prime, central location plot. Soulsby’s excuse was “the site was crumbling”.
The council can use a limited proportion of the money it gets from selling its houses to pay half the cost of buying back homes it once owned. This is called a buyback allowance. Council officials believe that by repurchasing six homes with £400’000 (which is ambitious with the average price of a terraced, semi-detached house or flat costing more than £262’000) will enable them to make a profit by reletting them at an affordable rent level.
The £400’000 comes from the nearly £2million fund in its housing revenue account, money that is used for the provision of social housing provided by the local authority. However, if the local authority doesn’t make use of the buy-back allowance, a fund intended to be used in crisis and not when levels of homelessness in the city are rising simply because Leicester City Council refuse to adequately fund homeless services whilst regularly whilst allowing large companies to fleece the local taxpayer.
A Leicester City Council spokesman said:
Purchasing properties is a relatively quick and easy way of helping to reduce the effect on the housing revenue account of reduced rental income, albeit to a limited effect due to the low value of receipts that can be applied in this way.
Council lawyers have however said the re-purchased homes could again be brought under Right to Buy after three years. Council houses purchased under Right-to-Buy are entitled to a discount which increases the longer a council tenant lives in the property, the discount is intended to help the lowest income earners onto the housing ladder. This means, by repurchasing social housing at market value to resell at a discount three years on is going to negatively impact the taxpayer, especially when, should the property be sold under mortgage and the purchaser fails to keep up with repayments leading to repossession and auction of the property, it is likely that the property will sell at an even larger discount.
Assistant mayor for housing, councillor Andy Connelly, said:
That is a risk, but we will get the benefit of having those houses available for rent for three years before they can be bought back again.
I actually think Right to Buy has had its day and it should now be scrapped.
We have a social housing crisis in this country, and Right to Buy is depleting the stock of homes we need to deal with that.
However, we argue that the social housing crisis will be solved as more affordable housing is built and the government achieves its goal of building 300’000 new homes per year but this might be difficult with Leicester City Council and possibly other Labour-led councils buying back social housing to resell at a discount three years later instead of using the funds available to instead build more social housing.
There are currently 6,000 low-priority people on the long-term waiting list for a council property in Leicester, of which there are some 20,000 council homes. The number of empty homes in the county and city combined is more than 4’000. This means that, if the council were to use the resources they already have available, this figure can be dramatically lowered without burdening other Leicester homebuyers and taxpayers.
While the Labour council is hostile to the Right to Buy scheme, supporters of it say it is an important part of helping people get onto the property ladder which we at Leicester Property Insight agree with entirely. The council said last month that it would use £2 million to set up its own house building company which would look to build 50 council homes this year on sites it owns around the city but has so far decided to use £400’000 to repurchase just six properties instead of using the funds to buy land which would enable to council to build up to double the number of new council homes it currently intends.
Outrage has been exhibited at the notion of buying back ex-council properties after the foolish decision was taken to displace 134 families and single people from the 23-storey Goscote House in Highfields without producing any proposals for replacing the homes of the people they were to make homeless.
The decision to demolish the tower block that has overlooked the city centre and Highfields since the 1970’s came after the assistant mayor, Andy Connelly, detailed plans to refurbish the building claiming it was a “difficult decision”.
Wycliffe ward councillors Mohammed Dawood and Hanif Aqbany represent the area around the tower. Councillor Dawood said:
At the end of the day, we have lost 134 affordable units. 134 is a hell of a lot to lose in an instant and I want to see how we aim to reduce that amount of loss with the waiting lists we have.
I want to see the plans.
However, as yet, there have been no plans released to combat the impacts this will have on the residents of Goscote house or the lowest income earners in need of social housing. Perhaps it is a bid to remove the lowest income earners out of the city like the planned Selective Licensing that will come into force increasing rents in the city by an estimated £60 per month, something Nottingham is also at risk of.