Opening a new route into home ownership? The extension of the Right to Buy to housing associations in England

Abstract

The introduction of the mandatory ‘Right to Buy’ (RTB) in 1980 for qualifying tenants in municipal housing was a significant development in British housing policy. It was an extension of the post-war ‘social project’ of the state-subsidised expansion of home ownership, leading to the sale of nearly two million dwellings over forty years. In 2015, the UK government sought to ‘reinvigorate’ RTB by extending it to the housing association (HA) sector in England, initially on a pilot basis.

This article investigates the impact of this pilot programme and the response of eligible tenants to the opportunity to purchase. It compares the pilot programme to the local authority RTB in terms of the changing demographic base of social renting, increased spatial differentiation in the housing market, the different institutional framework for HAs and the design of the pilot scheme. Research findings suggest that the take-up and impact of any national RTB scheme is likely to be limited, for a mixture of financial, institutional and demographic reasons. RTB will provide only a very selective route into home ownership for some HA tenants, as a specific segment of a more fragmented tenure than in 1980.

Keywords:

• Right to Buy
• Ideology of home ownership
• privatisation
• spatial inequality
• housing association

Notes

Acknowledgments

The research was coordinated through a steering group of the constituent housing associations and the Ministry of Housing Communities and Local Government which was chaired by the National Housing Federation. The research team for the project comprised Ian Cole, Kesia Reeve and Ben Pattison from CRESR, Sheffield Hallam University and Aidan While from USP at University of Sheffield.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 From this point onwards we refer to the statutory, national RTB scheme introduced in 1980 as the LA RTB in order to distinguish it from the housing association RTB pilot. It should be noted that the LA RTB also included properties from other public sector landlords and non-charitable housing associations.

2 Tenure definitions are contested (e.g., Ruonavaara, 1993) but 'home ownership' is used here to highlight the ideological connotations underpinning it.

3 Between 1980 and 2015, almost two million public sector dwellings were sold, while only 425,000 were built. (Murie, 2018, p. 488)

4 From 1989/90 to 2016/17 housing associations in England completed at least eleven times more new dwellings than local authorities, where restrictions on borrowing to invest have been more tightly controlled.

5 This compared to the same percentage of council tenants (46%) in the lowest quintile, 19% of private tenants, 4% of mortgage buyers and 22% of outright owners.

6 Since 2015, housing associations have been reclassified twice – first, brought into the public sector by the Office for National Statistics in October 2105 as a temporary expedient and then, in January 2018, 'transferred' into the private sector.

7 See Cole et al., (2017) for details.

8 The details of the pilot housing associations were placed in the public domain so they have not been anonymised in this research. Further details about the process for selection of the pilots and the characteristics of the associations can be found in Cole et al., (2017).

9 This relates to all stock held by associations in the pilot areas, not just eligible properties.

10 Authors calculations based on table DC4201EW of the 2011 census for England.

11 Variation in valuations between pilot areas was largely the result of local housing markets.

12 Authors' calculations based on ONS (2017) Table 2a, HPSSA Dataset 15. Lower quartile price paid for administrative geographies

13 N = 543

14 N = 543

15 n = 597

16 Authors calculations based on data from MHCLG (2018).

17 See Section 3.3 of Cole et al., (2017) for more detailed information on the approach taken in each pilot to property exemptions. See Appendix 1 for more detail on levels of demand at November 2016.

18 'Eligible tenants' refers to tenants living in eligible properties in the pilot areas.

19 n = 130

20 Authors' calculations based on data from MHCLG (2019).

21 The Treasury has provided £200 million to cover the cost of the discounts. Tenants apply for the RTB through a ballot.

Additional information

Funding

The research team for the project comprised Ian Cole, Kesia Reeve and Ben Pattison from CRESR, Sheffield Hallam University and Aidan While from USP at University of Sheffield.