Boris Johnson reveals right to buy extension plans

Boris Johnson has announced plans to extend right to buy to housing associations, while painting landlords once more as the enemy. “When ownership remains beyond the reach of a great many hardworking people, it’s neither right nor fair to put ever-vaster sums of taxpayer’s money straight into the pockets of landlords,” he told an audience in Blackpool. “The total bill for housing support stands at about £30bn each year, and the Office for Budget Responsibility has warned that if we don’t take action, it could reach £50bn by 2050,” Johnson added. “That is cash, taxpayers’ cash, that is being simply swallowed to pay the mortgages of private sector landlords or by housing associations.” After expanding on the revived policy to allow housing association tenants to buy their homes, Johnson said that private rents too should be looked at. “It is time to put this huge wall of money, taxpayers’ money, to better use,” he said. “It is time to turn benefits to bricks.” The heavily-trailed announcement came as part of an hour-long speech intended to set the tone for the next phase of Johnson’s time as prime minister. After speaking for 25 minutes about everything from the war in Ukraine to tariffs on bananas, Johnson said: “But today I want to talk about the single biggest chunk of household expenditure – and that is the cost of housing itself.” At the centre of this was the plan to extend right to buy to housing association tenants – a proposal that was mooted under his predecessor Theresa May, but quickly shot down as unworkable. “Now is the moment to widen the possibilities and give greater freedoms to those who yearn to buy,” said Johnson, including the 2.5m households that are tenants of housing authorities. “They are trapped,” he insisted. “They can’t buy, they don’t have the security of home ownership, they can’t treat their home as their own.” He went on to say that “while some housing associations are excellent, others have been known to treat their tenants with a scandalous indifference”. The detail is yet to be worked out – that is the job of Michael Gove’s department. But the PM assured his audience that “it will work for taxpayers”. He added that it will be “responsibly capped at a level that is fully paid for” and “affordable within our existing spending plans”, meaning that a full £3bn offer will be impossible. Instead, a pilot scheme in the tens of millions is more likely. He also guaranteed a “one-for-one replacement of each social housing property sold”. That is the same guarantee given for council housing, where only around 10% have been replaced. “We will finish the right to own reforms Margaret Thatcher began in the 1980s,” he claimed, “ending the absurd position where first time buyers spend their life savings on flats, only to find themselves being charged hundreds of pounds for painting their own doors or unable even to own a pet dog.” The complex proposal of using welfare payments to fund mortgages was also touched on. “We will look to change the rules on welfare so that the 1.5m working people who are in receipt of housing benefits and want to buy their first home will be given a new choice: to spend their benefit on rent as now, or put it towards a first-ever mortgage,” Johnson said. He added that the government would also look at securitising “some of that colossal £30bn housing benefits bill, so we can build more social homes with the potential for right to buy”. There will also be a “comprehensive review of the mortgage market”, which will report back this autumn. Johnson intends this to give more people “better access to low-deposit mortgages”. How the industry reacted The policy has so far found few fans in the industry. Ian Fletcher, director of policy at the British Property Federation, said: “The initiative fundamentally misses the core issue, which is helping people into social housing and reducing the waiting list. Extending right to buy runs the risk of exacerbating this challenge by diverting government funding away from new affordable housing supply. “There is also the not inconsiderable issue about the legal framework for all of this, and how property owned by independent organisations is going to be sold with, hopefully, their agreement.” He added that the sector, which needs 140,000 affordable homes, had been attracting new private capital, both equity and debt, due to “its stability and returns”, and said: “It is important this announcement does not risk undermining the interest in investment in the sector and further reducing supply.” Ilke Homes’ executive chair Dave Sheridan said the proposal was a “short-sighted response to housing supply logjams”. “Many housing associations have long-term development finance deals relying on private rental income to offset debt repayments and inflationary pressures,” he pointed out, from his position as a development partner with several housing associations. “Altering this already ailing ecosystem with demand-side intervention risks causing mass disruption throughout the housing market and further jeopardises the future development pipeline. “Extending right to buy to housing associations will prove both a costly affair and take years to implement – far from the short-term solution it’s being positioned as.” Shadow levelling up secretary Lisa Nandy said that plans would in fact make the housing supply crisis worse. “In principle, it’s a great idea to try to get more people the security of their own home, particularly people who find themselves in the benefits system. The problem is that, as always, the government has not thought through the detail.” Miatta Fahnbulleh, head of the New Economics Foundation thinktank, called the plans “half-baked”, adding: “Right to buy is a relic of a policy that has fuelled our housing crisis for decades. Extending it to solve a problem it catalysed is completely nonsensical.” Polly Neate, chief executive of the housing charity Shelter, described the policy as “baffling, unworkable, and a dangerous gimmick”. Neate said: “The government needs to stop wasting time on the failed policies of the past and start building more of the secure social homes this country actually needs.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Image © David Rose AP Shutterstock