Britain’s housing supply is so tight that the government is selling off poor people’s homes

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Britain’s government is trying to get more people on the housing ladder.

And while it promised to build 200,000 new homes across across the country every year for this Parliament, it is resorting to a range of schemes that affect existing supply in the market, to get more people owning a property.

The problem is that one of the schemes— Right to Buy — means that the poorest people in society are going to be stuck for somewhere to live, says the Public Accounts Committee (PAC) in a new report.

The Right to Buy scheme helps tenants in council housing to buy the place they live in by giving them a discount of up to £103,900 in London and £77,900 outside London. Now, the government has decided to extend this scheme to housing association properties – basically social housing but with private non-profit landlords.

And it is for this reason that PAC is seriously concerned about what that could mean for affordable housing (emphasis ours):

The policy of extending Right to Buy discounts to tenants of housing associations, funded by the sale of high-value council housing, has potentially significant impacts for both local authorities and tenants of social housing, especially in areas where house prices are high.

Despite the implications and complexity of this policy, the Department has not published a detailed impact assessment to inform Parliament’s consideration of its legislative proposals.

Many key policy details have not been clarified, with the Department offering only vague assurances as to how this policy will be funded, without producing any figures to demonstrate that additional funding from central or local government will not be required.

Other concerns remain, including the extent to which the new homes funded by this policy will be genuine replacements for those sold, and whether there will be sufficient controls to prevent abuse of the scheme given the significant discounts proposed for housing association tenants wishing to buy.

Replacing affordable housing

Thomson ReutersBritain’s Prime Minister, David Cameron, addresses the Conservative Spring Forum in central London

The biggest issue is what will replace that affordable property once it is sold off.

PAC says it’s worried that it may be all fair and well that the tenants buy their own home but wants to know what assurances the government has that it will immediately be able to replace that property with one that a poor person could move into.

“The government will not ensure that these will be like-for-like replacements. The properties can be a different size and in a different area, and may cost more to rent,” it adds.

The problem is, Britain’s housing market is out of control at the moment. There are too many people needing and wanting to buy a home, and too little supply to go round. This is causing house prices to soar.

The average house price in Britain now stands at £291,504, according to the Office for National Statistics. Meanwhile, the average London property price is at a huge £551,000.

The Resolution Foundation estimates that median income in Britain is £24,300. Londoners earn around £30,000.

So, if you are really poor, you need government help to afford somewhere to live. Rent is also rising massively. Homelet data shows that the average UK rental value (excluding London) is around £755 per calendar month as of March this year. That’s 4.9% higher than the same period last year.