Right to buy: Housing Associations

Graham_Devon

Remember the story about the government wanting to see Housing Associations sell off their houses via Right to Buy?

Well many were questioning how you would force a charity to sell of it's assets.

The answer, is becoming clearer. Force a change so that Housing Associations become public bodies. This will then allow the government to apply Right to Buy to the properties.

That, though, comes at a cost. Firstly, you need to buy the huge debts of the housing associations. These debts are long term and all secured on the long term rental income from the housing stock.

That will cost us £60bn.

We will then proceed to offer discounts on these properties to those living within them. That will cost us even further.

So in effect, we take on a debt of £60bn (adding 4% to our national debt) to buy the property assets and then immediately start giving a proportion of those assets away.

And for what? Ideology?

http://www.telegraph.co.uk/finance/economics/11870981/Housing-associations-could-add-60bn-to-national-debt.html

And remember the promise in 2012 when they ramped up RTB again? 1 house built for every one sold? Well the figures looked bad a year ago. They look positively disgraceful now.

Just 8% of councils have built enough stock to replace the homes sold under RTB.

1 house has been built for every 9 sold under RTB.

princeofpounds

Let's face it, they are basically public bodies anyway, despite theoretically arms-length management.


Don't count only one side of the balance sheet - there are liabilities sure, but you forgot about the assets. what is the net equity in these housing associations? Forgetting such a basic thing makes me question your premise, let alone your conclusion.

Graham_Devon

princeofpounds wrote: »

Let's face it, they are basically public bodies anyway, despite theoretically arms-length management.


Don't count only one side of the balance sheet - there are liabilities sure, but you forgot about the assets. what is the net equity in these housing associations? Forgetting such a basic thing makes me question your premise, let alone your conclusion.

I'm not forgetting it. We just don't know the value of the assets at the moment. All we do know is we will immediately start giving a percentage of the assets away as discounts. The other thing to remember is that these assets will need maintanance. I don't have a problem with that, but were always told council houses are the wrong way to go about things as you need to maintain them.

The point was more about why we are looking at doing this? What does it achieve? Afterall, the tories themselves suggest that nationalising pretty much anything is the wrong way to do things.

For example, they argue that nationalising electric and rail will involve huge costs for little benefit. So what's different here?

CLAPTON

it is anyway on the cards that the 60bn will be added to the public debt as HA are really already public sector bodies

This of course, doesn't actually 'cost' us anything as it will be an accounting change with nothing changing in the real world

I am confident that it will be determined that the 'assets' are well above 60bn even with substantial discounts.

cells

something like 2.5 million homes, or less than £30k a house. Definitely the assets are worth more than the debts probably by a factor of 3x if not more

a lot of these 'charities' were formed by transferring council stock to them.

also all this is going to be small, millions have RTB on their council homes yet few can afford to buy them and only thousands are sold pa as a result

MSD1970

A huge percentage of properties sold off under RTB are now tenanted as they were sold on to buy-to-let landlords. (I think the figure is around 50% of RTB sales). The rents are much higher. (I work for a Housing Association and know of a 3 bed house with a private rent of £575 per month which is £210 more than our rent for the same property next door. Both properties have rent paid by Housing Benefit, just the private one is enriching a BTL landlord who may or may not be maintaining the property to the same standard and has no compunction about serving a Notice to Quit thereby making a family homeless because he feels like selling up to cash in his investment.
Extending RTB to further Housing Association tenants is shortsighted, dogma driven societal vandalism and should be opposed at every turn.

Generali

So MSD1970 you don't support a policy from which your employer and by extension you stand to lose. Hmmm.

marleyboy

I can see many charitable organisations being put off the idea of building any future HA properties.

cells

marleyboy wrote: »

I can see many charitable organisations being put off the idea of building any future HA properties.

generally speaking charities didn't spring up from nowhere and decide to build houses to rent out at a loss. A lot of the HA stock is/was simply transferred from the councils.

So the state built a house, then 'sold' it to a HA for £40,000 so the HA could rent it out at a break even price of £400pm (after paying the fat cats £200,000 pa wages and their buddies given the maintenance contracts)

some of the other stock was transferred from builders who were obliged to build houses and sell them at a price a social provider could rent at £400 a month for


of course any true charity where a rich individual or groups of people left homes to be rented under whatever terms should be exempt. but HA are not charities they are state asset managers

cells

If you pretend for a moment that private rentals are illegal or where never invented they simply dont exist

then you have just two groups. owners and council renters

What that means is if the council renters stock is high then the owner stock must be lower so they both add upto 100%

people who like and want a high portion of council homes dont realise that it has to be at the cost of home ownership to some degree

cells

Generali wrote: »

So MSD1970 you don't support a policy from which your employer and by extension you stand to lose. Hmmm.

i think the real hate for the RTB is that it ends up in a lot of cases as private rentals however that's probably not a bad thing and highly misunderstood

the people I know who used RTB mostly to buy their flats in inner London went on to buy property in outer London selling their flats to in some cases probably BTL Landlords.

This for whatever reason is seen as evil when the reality is that someone who didn't need to be in inner London was moved to outer London. And the ownership stock increased, it doesn't matter than the original RTBer moved to another house elsewhere the alternative to RTB in many cases would have been the original RTB would have stayed as a council tenant.


there are also social benefits in diluting 100% council estates with private renters and a few owners. One is that private renters tend not to have kids and one of the problems identified with a lot of London council estates was that they had too many kids all in once place causing havoc.