Tory ministers want to sell off even more of Britain’s remaining council housing stock. The “reboot” of Margaret Thatcher’s right-to-buy scheme means tenants will be bribed to buy their properties with a discount of up to £75,000.
None of these homes will be replaced with new council housing. Some will be replaced by so called “affordable” homes. These charge 80 percent market rents with fixed term tenancies.
There is a desperate shortage of council homes in Britain. Nearly five million people are on waiting lists.
In April the Treasury will transfer £29 billion of historic housing debt onto local authorities. But it will write off any debt associated with housing stock that gets sold into the private sector.
The Tories have also recommended that councils increase rents by up to 8 percent. The government’s Localism Bill will give councils more powers to scrap secure tenancies.
So how do the Tories plan to address the acute housing crisis? Astonishingly, their answer is to create a new programme of government-backed subprime mortgage loans.
The NewBuy scheme was announced on the same day as the right-to-buy relaunch. People who can’t afford the deposit on new build homes can now have mortgages guaranteed by building companies and the government.
House prices have risen so far above average wages that many people can’t afford to take out a mortgage any more. But instead of imposing price controls the government is trying to keep prices artificially high.
The NewBuy loans are similar to subprime mortages sold to poor people in the US. These turned toxic in 2007—triggering the global financial meltdown.
NewBuy will encourage people to take on debts they can’t afford for cramped, low-quality houses. This will only make housing profitable for banks and building companies.
The government is effectively acting as a loan shark for the private sector—instead of investing in decent council housing at genuinely affordable rents.