Jonathan Pearson is director at Residentially
Since its inception in the 1980s, the UK’s Right to Buy scheme has enabled more than two million council tenants to purchase their homes, transforming home ownership in this country. One of the original goals of Right to Buy was to promote homeownership, particularly among low-income families. However, the UK’s housing needs and challenges have evolved dramatically since its launch more than 40 years ago.
The number of council houses being sold off without enough adequate replacements being built has led to a huge reduction in affordable housing stock that is exacerbating the affordable housing crisis many are experiencing today. For example, nearly 11,000 homes were sold through the Right to Buy scheme between 2022 and 2023, but only around 3,500 were replaced, resulting in almost 7,500 affordable homes being lost from the sector during that year alone.
As Great Manchester Mayor Andy Burnham, who has called for the suspension of the Right to Buy scheme in his city, puts it: “trying to solve the housing crisis is like trying to fill a bath but with the plug out, because you try and build new homes, but you lose them at the other end.”
Now, Deputy Prime Minister Angela Rayner, who bought her first home under the Right to Buy scheme, has said the government will begin a consultation to explore how they can address the problem of the right to Buy scheme depleting affordable housing stock, due to more homes ‘being sold than built’.
This follows some speculation Labour was planning to scrap Right to Buy altogether, something I know many of the affordable housing providers I work with across the country would have been supportive of.
One parish council I work with are developing twenty new homes which have been promised to local people for Affordable Rent or Social Rent. So certain are the council that the homes should remain accessible for people living in the village throughout their lifetime, they have even turned down the opportunity to offer any Shared Ownership properties within the development, despite the fact this would increase its overall value.
Angela Rayner has suggested that reducing the discounts tenants currently receive could reduce the uptake of the scheme. But another key challenge with Right to Buy is ensuring that the funds generated from home sales are reinvested effectively. Local councils and housing associations often struggle to use the proceeds from Right to Buy sales to build new homes at the same rate they are sold. So any reforms must address this imbalance, either by providing additional financial support or by allowing local authorities greater flexibility in reinvesting these funds.
And, with the Help to Buy scheme also ending in England last year, I believe the challenges being caused by Right to Buy, and the new scrutiny facing the scheme, should prompt the affordable housing sector to encourage more people to turn to Shared Ownership as a viable affordable route for aspiring homeowners.
There are currently around 250,000 Shared Ownership households in the UK, with the model allowing individuals to purchase a share of a property, typically between 25% and 75%, and pay rent on the remaining portion. Over time, they can “staircase” up by buying additional shares.
The scheme helps to bridge the gap between renting and buying by offering a more accessible route to home ownership. And for housing associations and local authorities, it has become a key element in Section 106 agreements and a vital and valuable component of affordable housing strategies that doesn’t reduce existing stock.
But just over 70,000 properties were purchased through Shared Ownership in the 10 years up to March 2023 according to ONS data, compared to the more than 150,000 that were bought using Right to Buy and nearly 390,000 purchased through the now defunct Help to Buy.
If Shared Ownership is to be seen as a viable alternative to these schemes, it must become more widely understood, which means clearer communication about the benefits and processes involved to increase uptake among potential buyers.
Ultimately, any evolution of Right to Buy could mark a significant turning point in the UK’s approach to affordable housing and home ownership if the government is to make good on its promise to refine the scheme to better preserve existing affordable housing stock for those who need it the most. Simultaneously, by refining and promoting Shared Ownership schemes, we can continue to offer a realistic and flexible route to home ownership for many more.
With around 250,000 Shared Ownership households in the UK today, the scheme provides important benefits that must be preserved. It represents the most valuable element of affordable housing for housing associations and local authorities and is a key part of Section 106 agreements in larger private developments, where the typical policy includes one-third Shared Ownership and two-thirds Affordable Rent.
However, it’s essential to acknowledge the challenges within the Shared Ownership model. A report by the Housing, Communities and Local Government Committee found that many Shared Ownership households face rising rents, uncapped service charges, and disproportionate repair and maintenance costs, pushing the tenure out of reach for many. These issues highlight the need for a more accessible and widely understood Shared Ownership model, with clearer communication about the benefits and processes to increase uptake and reduce confusion among potential buyers.
The potential ending or modification of the Right to Buy scheme signifies a pivotal moment for affordable housing and home ownership in the UK. While it historically enabled millions to own their homes, the unintended consequence was a depletion of affordable housing stock. Embracing and refining Shared Ownership models could bridge the gap between rental and full ownership, offering a flexible path for individuals to secure housing.
However, for Shared Ownership to fulfil this role effectively, it requires an overhaul. Clearer communication, fairer terms, and better support for shared owners is essential. By learning from initiatives like the parish council’s focus on affordable rentals, policymakers can work towards a balanced housing market that preserves affordable housing for those who need it while still offering pathways to home ownership.
Ultimately, addressing the affordable housing crisis will require a multifaceted approach that considers the diverse needs of communities across the UK. Ending Right to Buy may be a step in preserving affordable housing, but it must be accompanied by robust alternatives that support both current and aspiring homeowners.
Simultaneously, by refining and promoting Shared Ownership schemes, we can offer a realistic and flexible route to home ownership for many. The combined efforts of government policy adjustments and local initiatives, like that of the parish council, can pave the way for a more equitable and sustainable housing future in the UK.
