Sales of properties under the Right-to-Buy scheme, the reason for the biggest increase in home ownership in the last 50 years, continue to be well down on previous years, according to research by HSBC.
On 3 October 1980 the Housing Act paved the way for 2.5 million council home sales under the Right-to-Buy scheme, which was introduced by Margaret Thatcher.
Analysis of government data by HSBC shows that in the tax year, 2009/10, just 4,622 Right-to-Buy sales took place across the United Kingdom. This is down from 6,716 in 2008/9 and represents a fraction of the 193,600 that took place in 1982/3. Right-to-Buy sales have been steadily reducing since 2003/4 (91,988) when incentives for buyers were reduced.
Since its introduction, Local Authorities have received £45.5 billion capital receipts for the Right-to-Buy scheme. With an average discount of 47% on the property value over this period, the value of assets given away amounts to £40.4 billion. The present value of the stock of council houses sold off is in excess of £185.6 billion.
The total value of council homes sold amounts to £85.9 billion, making it by far the largest ‘privatisation initiative’. Total proceeds of the UK’s privatisation programme, initiated in 1979 by Margaret Thatcher, amounts to £58.3 billion including £15 billion for BT in the 1980s and £12 billion for the electricity companies in the early 1990s.
The Right-to-Buy scheme has also been responsible for the biggest increase in home ownership in the last 50 years.
Since 1980, 2.5 million council properties have been sold through the Right-to-Buy scheme out of an original stock of 5 million. At the beginning of 1980, one in three of the country’s households were council tenants. Now only 11% are council tenants (with another 8% renting from housing associations or registered social landlords).
In 1980 home ownership was 57% but it now stands at an estimated 68%. Ten out of the 11 percentage point increase is directly attributable to council house sales over this time.
The number of households in Britain has risen from 20 million in 1980 to an estimated 25 million in 2010. The average council house price in Great Britain at the beginning of 1980 was £15,179. Presently it is £97,828 – a six-fold increase.
Scotland has sold off the most council houses under the Right-to-Buy scheme. Around 441,000 houses have been sold, representing 19% of the total for the country.
Second comes London with 290,410 sold (12%), and then the West Midlands with 215,640 sold (9%).
The region in the UK with the lowest number of council house sales is Northern Ireland with 117,106 over the 30-year period. Wales is second lowest with 135,745 (6%).
Martijn van der Heijden, head of lending at HSBC, said: “The right-to-buy initiative has its supporters and detractors, and was a central plank in the Conservative party housing policy in 1980. Since then, successive governments have embraced the policy.
“The scheme has been facing scrutiny lately with the current shortage of council housing stock. However, no-one can deny the major impact it has had on homeownership in Great Britain and the massive windfall gains to millions of council house sitting tenants.”