An investigation has disclosed that councils are selling off their house holdings cheaply to investors who are renting them back to the tenants. The new initiative by government to encourage the selling of houses by councils has allowed the exploitation of social housing for personal profit.
Although they have limited supply of housing stock, councils have started selling these off while allowing their former tenants to turn into buy- to-let landlords. Therefore, local authorities are likely to face an increase in cost when it comes to placing impoverished families in the properties that the councils once owned.
Presently, more than 30 councils pay out or rent housing benefits to tenants who are living in homes that were sold after the government revamped the Right to Buy’ scheme in 2012.
Even though there are rules designed to prevent the immediate sale of any property hat was bought under this scheme, it is clear that renting is unregulated. Therefore, the generous discounts on sales from government have, effectively created new right- to- buy landlords. Council leaders are nor branding these landlords a national scandal’. People are turning to Wigan estate agents with lower commission fees to rent and sell which is likely to be the saving grace under fire in the long run with regard to the current state of the property market in the UK.
Right To Buy
David Cameron increased caps on the maximum discounts to £75,000 (and £100,000 for London). In the Haringey borough, 396 homes were sold under the Right to Buy scheme. Of these, 28 have already been rented out to tenants on housing benefit at costs exceeding £ 265,000 a year. The fact that these costs are drawn from the public purse has caused general outrage.
Of the 82 council homes that were sold under this scheme in Corby, Northamptonshire, people on housing benefit have rented 25. This has created a cost of £ 85,063.95 since 2012.
No Data Available
Close to 100 local authorities claimed that they were unable to supply relevant data to FOI requests since the sales were made to private providers. Mr. Darren Johnson, the spokesman for the Green Party on housing stated that it was outrageous that Right to Buy council houses are being released into the market at highly inflated rents even with reported cases of desperate social housing shortage.
However, Mr. Brandon Lewis, the housing minister, defended this scheme. He claimed that the scheme was designed to help social tenants perch on the housing ladder, increase housing construction and reduce social- housing waiting lists.
Affordable Homes Available To Rent
On the other hand, the National Housing Federation head of policy, Ms. Rachel Fisher stated that the scheme effectively decimated the overall supply of affordable homes available for rent at a period when the country was facing major problems with affordability and housing. She further said that social housing was designed as a reserve of those who needed it the most.
Despite these statements and calls to action, it is likely that the sale of council homes will increase. This is in the wake of a government announcement that there would be more discounts in the future. At the moment, buyers can get their hands on homes at discounts of up to £ 77,000 (or £ 102,700 in London). Finally, these discounts will increase on an annual basis in line with inflation.