Right to Buy policy not accurately costed, open to abuse and may make housing crisis worse, MPs claim

Public Accounts Committee says the Government should be ‘embarrassed’ by the findings of their report

Figures released by 91 councils in England under the Freedom of Information Act last year show 37.6 per cent of flats sold to tenants under the Right to Buy scheme are being sublet at up to seven times the cost of average social rents (Getty)

The Government’s controversial manifesto pledge to allow housing association tenants to buy their own home at a discount has not been accurately costed, is open to abuse, and may well end up exacerbating the UK housing crisis, an influential committee of MPs will warn.

The Chairman of Public Accounts Committee said that the controversial ‘Right to Buy’ scheme was based not on a “back of an envelope calculation” because there was “no envelope at all”.

Meg Hillier added that while the policy would affect many thousands of people, ministers had failed so far to provide even basic information on how the scheme would work.

The committee, which is made up of both Tory and opposition MPs, said the Government should provide “a full analysis showing how this policy is to be funded, provide a clear statement of where financial and other risks lie, and spell out its contingency plan if its policies prove not to be fiscally neutral”.

It added that the Department of Communities and Local Government should also publish detailed data on how it intended to ensure that every home sold off would be replaced with a like for like social property.

“Experience of the reinvigorated Right to Buy for council tenants shows that meeting such one-for-one replacement targets can be difficult,” the committee said.

“Moreover, replacement homes can be in different areas, be a different size, and cost more to rent.

“Where new homes are built in different areas, or are let at higher rents or sold as Starter Homes, the Department’s policy of extending the Right to Buy could mean a long-term reduction in homes for social rent in some areas.”

The Committee called on the Department to publish a full impact assessment of the policy and “a full analysis showing how it is to be funded, provide a clear statement of where financial and other risks lie, and spell out its contingency plan if its policies prove not to be fiscally neutral”.

Ms Hillier said that the Government should be “embarrassed” by the findings of the report – which is one of the few done by the PAC in advance of the policy becoming law rather that after the event.

“Extending Right to Buy will affect many thousands of people yet we have heard vague assertions about what it will accomplish and how,” she said.

“The approach to paying for this policy seems to be entirely speculative. On the basis of evidence heard by our Committee, there are no costings or workings out. We are not talking about a ‘back of an envelope’ calculation – there is no envelope at all.

“Similarly scant regard appears to have been paid to the practical impact on social housing tenants, the long-term knock-on costs of the loss of social housing and potentially of a change in the mix of housing types.

The fallout from Right to Buy over the past 30 years means there is a now a chronic shortage in local authority housing (Getty Images)

“We can form our own views about the Government’s motives for this but Parliament and the public are being asked to take a leap of faith about how this will stack up financially, and that is completely unacceptable.

The Local Government Association said their projections showed that extending the Right to Buy scheme to housing association tenants could cost £6 billion over the next four years, as almost 100,000 households take up the offer.

“We share the Committee’s concerns about the difficulty in assessing the impact of this in each local area, and have opposed proposals for it to be funded by forcing councils to sell much needed housing,” said Sharon Taylor, vice chair of the Association.

“We are urging MPs to vote for a vital amendment that will mean councils retain sufficient funds to replace any higher value home they are forced to sell to fund the policy one-for-one and with a tenure that best meets local need.”

But a Department of Communities and Local Government spokesperson said the Government made “no apology for helping people into homeownership”.

Our voluntary agreement with housing associations will mean 1.3 million tenants will have the chance to own their own home, while every home sold will be replaced with a new affordable property,” they said.

"We are currently working jointly with the housing association sector, and are running a pilot to assess the operation of the scheme and have always been clear we will set out further information.