24th April 2015
The Institute of Fiscal Studies (IFS) has warned the Conservative plan to extend Right to Buy would reduce social housing and be costly for taxpayers.
The Conservatives have plans to extended the Right to Buy scheme to 1.3 million housing association tenants if they are re-elected, allowing them to buy their social housing homes at a substantial discount. The discount would be £103,900 in London and £77,900 in the rest of the country.
The think-tank has warned that uncertainties in the way the extension would be funded means there is ‘a risk that the policy could lead to a further reduction in the size of the social sector – something the Conservative Party’s proposal seeks to avoid’.
The Right to Buy extension hinges on local authorities being forced to sell off their most expensive properties and use the proceeds to fund discounts, but that this system would cost the taxpayer.
‘An increase in Right to Buy sales would amount to a substantial giveaway to a relatively small number of households,’ said the IFS.
‘By selling pubic assets to fund a giveaway the policy would ultimately represent a deterioration of the long-run state of the UK public finances.’
The IFS estimated that a maximum of 221,000 homes could be sold to tenants with a total value of £11.6 billion over the next parliament and many more people would be unable to afford to purchase their council property.
The government said selling off expensive social homes would raise £4.5 billion a year. A council house would be considered expensive if it fell within the top third by value of properties of the same type in the local area.
While the government is expecting each sale to raise £300,000, in 2012 Policy Exchange looked at the figures and estimated £160,000 would be raised per property.
The IFS said the increase may be down to higher house prices.