UK Government Housing Bill could lead to the sale of 23,500 council homes in one year, Shelter warns

The average council in England will need to pay more than £25 million a year to fund the Government’s controversial right-to-buy extension, research has revealed.

Shelter, a housing charity, said this corresponds to the sale of 23,500 council homes in the UK in just one year.

The Government has said that a planned extension of its right-to-buy scheme will be funded by local authorities selling off their most valuable council houses. The money should then go towards people trying to get on the housing ladder by funding discounts of up to £103,900 for tenants seeking to buy their own home.

But the plans mean each local authority would need to raise an average of £26 million to reach the £4.5 billion per year necessary to fund the extension of the right-to-buy, Shelter said.

Shelter’s analysis estimated the value of council homes in each area that are likely to become vacant and compared it to the price per year needed by the government to fund the extension of right-to-buy.

The association found that Birmingham is expected to be the area hit the hardest, with the council forced to raise 145 million per year from the sale of 1,190 council houses. Leeds and Southwark follow with the councils expected to raise £129 million and £122 million respectively.

The Housing Bill also makes no commitment to replace the homes sold off like-for-like, Shelter said. This means that affordable homes in an area could be replaced by starter homes costing up to £250,000, or £450,000 in London.

Campbell Robb, Shelter’s Chief Executive, said the Government decision to force the council to sell off huge swathes of the few affordable homes is "reckless".

“The small number of lucky winners from this policy will understandably be grateful for the chance to buy their Housing Association property. Ultimately, far more people will lose out and be left with no choice but expensive, unstable private renting," Campbell said.

“The government is out of touch on this issue, and running out of time to help the millions of ordinary people crying out for a home that they can actually afford,” he added.

Shelter’s report echoes fears raised by the Public Accounts Committee last week.

The committee, which is made up of both Tory and opposition MPs, said the Government should provide “a full analysis showing how this policy is to be funded, provide a clear statement of where financial and other risks lie, and spell out its contingency plan if its policies prove not to be fiscally neutral”.

It added that the Department of Communities and Local Government should also publish detailed data on how it intended to ensure that every home sold off would be replaced with a like for like social property.

“Where new homes are built in different areas, or are let at higher rents or sold as Starter Homes, the Department’s policy of extending the right-to-buy could mean a long-term reduction in homes for social rent in some areas,” the committee said.

A Department of Communities and Local Government spokesperson said the Government made “no apology for helping people into homeownership”.

Our voluntary agreement with housing associations will mean 1.3 million tenants will have the chance to own their own home, while every home sold will be replaced with a new affordable property,” they said.

The scheme is due to be rolled out across England later this year.