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June 13, 2022 - 10:15am
The problem with having the ‘Right to Buy’ social housing is that once it’s been sold you don’t have social housing any more. Last week’s expansion of the Right to Buy scheme extends this right to tenants of housing associations —approximately 2.5 million people. The government has pledged to replace each and every property sold.
I’m an architect: my job is to deliver homes. I’m not so sure about the government’s plans. The scale of social housing replacement that could result from this may be be hundreds or thousands of homes a year, and housing development on this scale is not straightforward.
Assume that when a local authority or housing association has sold off some of its social housing it has found enough land that can be developed, or developers to deliver social housing as part of a larger scheme to replace everything it has sold. This is a big ‘if’.
The next hurdle is the planning process. That’s tricky enough for a loft conversion — but as a development gets more complex so does the planning process. First homes, hopefully of high quality, and a like-for-like spatial replacement of those sold, need to be designed, structure and building services designed in principle, coordinated with building regulations, local planning policy and, possibly, the new ‘Gateway One’ in the Building Safety Bill.
Also necessary are the studies into the site and the impact of the development — this may include environmental, transport, contaminated land, daylight, party walls and more. The local community and neighbours must be consulted and their comments considered so negative impacts of the development can be mitigated. Once this is all complete applications can be submitted to overstretched planning departments. Decisions are meant to come within eight weeks, but this is very unusual.
Assuming again the scheme sails through planning with no objections it must then be drawn for construction — it will be detailed and coordinated with a large team of architects, engineers and specialist consultants to make it beautiful, and safe to build and to live in. This sounds straightforward; it rarely is.
During this process a contractor will begin to be involved and the project is tendered and contracts negotiated and signed. Conveyancing on a house feels like it can take some time, but pales in comparison to the process of contractor and developer negotiating a large building contract. There may be some Planning Conditions which then need to be signed off before construction can start.
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SubscribeThis writer misses a vital point. In the vast majority of cases, the property in question will be a flat. If the individual decides to “buy”, their tenure will change from rental to leasehold, because 95% of flats in England and Wales are sold as leaseholds. Leasehold is NOT property ownership. It is simply a mortgaged form of long term tenancy, where you borrow to pay hundreds of years of rent up front. You then own a tenancy agreement which could be anything from 125 years to 999 years. Housing Associations will still be in the position of your landlord, even after you think you have “bought”. Normally if there’s a maintenance issue in a short term rented property, the landlord has to carry out and pay for repair. But…once you convert from being a short term renter to a long term leaseholder, YOU take on all the cost of maintenance and repair. If you enter this arrangement via a “shared ownership” scheme, you may only lease 10% of the value of the flat while still paying “rent” on the remaining 90%. ONLY NOW YOU WILL PAY 100% of your share of repair costs. Suppose the building needs major works. A new lift. A new metering system. Or, horror of horrors, fire safety remediation. (A lot of these blocks of flats are seriously shoddily built.) The need for such work will be determined by your landlord. The cost will also be determined by the landlord. Expect those costs to be significantly padded to the benefit of landlord and managing agent. Major works are an absolute racket, as any current leaseholder will tell you. As a result, you could unexpectedly find yourself with bills for thousands of pounds. If you are on benefits, how will you afford that? Take the landlord to court to challenge any of this? Good luck! Your lease probably says you have to pay his legal costs via your service charges, as well as your own. And whatever they tell you the service charge will cost you to start with, trust me it will rise exponentially once they’ve hooked you into signing a lease. In good times, with a housing market rising overall, leaseholders could sell on the remaining part of their leases and genuinely move “up the housing ladder”, freeing themselves from this mess. But since Grenfell and with all the publicity about the inequities of leasehold, sales of flats have dropped by 60% in the past three years. People who get involved in Help to Buy and Shared Ownership schemes like the one proposed may find themselves in the position of young Hayley, a hard working professional woman who couldn’t earn enough to pay for fire safety work she never suspected her building would need. She couldn’t sell her flat. She was trapped. A little over a year ago she had to hand back her keys. She was left homeless and bankrupt. She went through all that at the tender age of 27 just for wanting to “own her own home”. She did nothing wrong yet she’ll pay the price for the rest of her life. Not only does this proposal deprive the rented sector of social housing.(I agree with the author’s points on all this.) It will lure in yet more innocents like Hayley who don’t understand that leasehold isn’t home ownership at all. These people won’t have financial safety nets, if costs go up beyond what they can afford. They may find their leases forfeit – which means just taken away with zero compensation. They will be left with nothing. Johnson’s new proposal effectively takes benefits, which are public money meant to sustain those in need, and funnels that money into the pockets of the bloated housebuilding and freeholder sectors. It is hard to think of a more corrupt or morally bankrupt proposition. Yet Unherd appears to have no understanding of the dangers of leasehold and has written nothing intelligent about it.
You make some good points, but many of those who bought council housing did actually make a lot of money from it, despite the drawbacks of leasehold you explain. There has been in fact significant reform of the leasehold system, but I agree it is anomalous and not many other countries have such a system.
Well said. How depressingly complicated it all seems, in contrast to the slogans shouted by both sides about fixing the state of housing in this country.
I think it a great pity that Johnson is not advocating the Right to Buy for all tenants of private landlords. That would be the fastest way to increase owner occupancy! Social Housing is a necessary safety net.
Wow … house building sounds daunting! By comparison, I know a bit about building and operating a metal tube to transport hundreds of people at 600 mph for 1000’s of miles and it’s really, really, really complicated, so much so that house building is utterly simple.