The sale of housing association property: the Conservatives' answer to the threat of sausage rolls

While a UKIP candidate is being questioned for the ancient offence of “treating” potential voters, in this case with sausage rolls (a report here), the Conservatives have unveiled their retaliation.  They are proposing to give away £20 billion of housing association property – a madcap commitment which, of course, is rather more expensive than giving away sausage rolls but is not subject to the same legal limitations.    They hope to replicate the success of the Thatcher government in persuading tenants with aspirations to vote for them.

The sale of council houses now has a long track history, so we don’t have to guess what the effects of such a policy might be over time.  They include:

  • the residualisation of social housing: the better housing is sold, the worst remains
  • severely reduced access to housing for people on low incomes
  • restricted takeup, because tenants tended to be on low or inseucre incomes – that was why the strategy to close down council housing shifted from sale to stock transfer
  • gradual transfers of the rented stock into private hands, and
  • massive public expense, not just through sale but because of increased costs for government in the form of housing benefits.

There are however three key obstacles to the sale of housing association property, which did not apply to council housing.  The first is  that the current system of social housing finance depends heavily on the ability of housing associations to raise development capital on the basis of  the security of their income, and the sale will disrupt that system.  Second, most housing associations have an overriding charitable function, and governments have limited powers to tamper with  them – which is why the Thatcher government was defeated in the Lords when it tried to do this in  1980.   The third, however, is fundamental and crucial.  Housing Associations are independent corporate organisations. The government doesn’t own these houses.  It has no more authority over them than it does over the assets of any private citizen.    I will be intrigued to see how the government proposes to frame legislation in terms that might apply to housing associations but would not apply equally to the tenants of private corporate landlords.

3 comments

  1. David Bennett

    Hi,
    I wonder whether I could ask you for a ‘short course’ on the history of social housing and Right To Buy since RTB first became law? Or rather, in correcting what I have got wrong about how the laws were introduced?

    My argument is that what RTB did was to turn a generation of tenants into pseudo-middle-class people. I do not mean that as a derogatory description of them: I mean it as a description of a group who had suddenly become the owners of capital but whose capital was wrapped up in the roof over their heads, and who had no free capital to play with.

    Initially, bank loans or additional mortgages had to be applied to improving properties. Subsequently, credit cards were freed up and loans were freed up so that people were allowed to borrow for holidays, or anything at all. They borrowed to the hilt knowing they had the means to remortgage when they sold their properties and bought another.

    And everything went swimmingly as long as house prices kept on rising, mortgage rates were kept low, and everyone was in work.

    But when it all went wrong in the late 1980s, people lost their homes and the real middle class bought up their properties and rented them out.

    And the Government meanwhile required that Local Authorities stopped building houses for rent and sell off their existing stock to housing associations – associations who did not have funding to build new homes.

    And then the Government took away lifetime security of tenure so that long-term tenants and replaced it with a five-year maximum so that the tenants were practically on the same knife-edge as shorthand tenants.

    All of which I think is characterised as the 20th/21st century Enclosures.

    And it couldn’t have worked out better if had been planned from the start.

    And that is what I think is behind the latest RTB proposal.

  2. Paul Spicker

    You ask for a short course (!). I’ve got a general outline of housing policy at http://www2.rgu.ac.uk/publicpolicy/introduction/housing.htm : that covers the background to owner occupation, social housing and private renting. The book which best encapsulates the period you’re after is probably I Cole, R Furbey, 1994, The eclipse of council housing, Routledge.

    Council housing was intended to be “housing for the working classes”, and there was a general understanding in the post-war period that it was housing for life. That also meant that there were many tenants who, however they started on the housing ladder, were in due course long-term renters on higher incomes. The Conservative government under Edward Heath didn’t approve of subsidised, low rent, secure housing – and besides, council estates were seen as Labour strongholds. The 1972 Housing Finance Act trebled rents and introduced Rent Rebate (now part of Housing Benefit) because so many people couldn’t pay the increased rate. It also started sales – just not at a discount. Then Peter Walker, at the newly created DoE, suggested that tenants might be given their housing (an idea recently revived by Iain Duncan Smith); that was watered down in due course to become the sale of council housing at a discount. The motivating factors politically were a combination of negative views of council housing and a belief in a property-owning democracy – the sale of council housing was going to give people “a stake in the country” (the phrase is Churchillian). Michael Heseltine proclaimed it as a major redistribution of wealth.

    The problems which came about are mainly the ones I’ve listed in the blog. They were evident in the 1970s, well before the 1980 Act. When houses were sold, the housing wasn’t replaced; council’s weren’t permitted to build, to finance new housing or to buy to meet needs; the stock was aggressively run down. Then there was stock transfer, because the existing tenants couldn’t afford to buy their houses even with a discount. So no, this isn’t a problem of “credit crunch” or the late 1980s. It’s the product of a deliberate, explicit 40+ year policy to run down public housing.

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