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Is selling off expensive council homes such a bright idea?

20 August 2012

8:53 AM

20 August 2012

8:53 AM

Here’s a policy that looks like it could be a vote winner while helping to solve Britain’s housing crisis: selling off expensive council homes. Think tank Policy Exchange has published a paper this morning proposing that local authorities be allowed to sell luxurious properties in their boroughs as they become vacant in order to raise money for new, cheaper social properties. The report’s author, Alex Morton, believes this could lead to 28,500 expensive properties being sold off each year, raising £5.5 billion for new housing construction.

The idea is also, unsurprisingly, quite a popular one with voters. The report points to 73 per cent of voters agreeing that people should not be offered council houses that are worth more than the average house in their local authority, and a net agreement of +27 per cent among social tenants themselves on this matter. To underline that support, the opening pages of the report feature some rather eye-catching pictures of expensive social housing that look more at home in the pages of Country Life than a local authority lettings list.

This is a very compelling case. But it has a big flaw, and it’s one that Conservative councillors in areas where housing is expensive are well aware of. If you slowly sell off the most expensive houses as they become vacant and build cheaper homes in cheaper neighbourhoods, you run the risk of the gradual residualisation of social housing. This would not be the ‘social cleansing’ that some of the more hyperbolic critics of the housing benefit cuts unhelpfully predicted, but it would see a gradual shift towards a Parisian model of the social housing ringing a city in only the cheaper areas. Those areas are the ones with poorer job prospects, which increases the risk of tenants who are unemployed remaining so. Philippa Roe, formerly cabinet member for housing in Westminster and now leader of the council, has always promoted the idea of mixed communities within her expensive borough. She was concerned last year when reports emerged that the government wanted to move rich social tenants from their homes, arguing that she would rather see those tenants being asked to pay higher rents in order to maintain a mixed community in Westminster. That was the scheme ministers finally developed: the pay-to-stay programme, where tenants earning more than £60,000 either pay a higher rent or are asked to move.

The Policy Exchange proposals use a regional median of property values, in order to ensure that sufficient numbers of homes within central London could be sold off. The report argues that the standard deviation within a region is sufficient to ensure new homes could be built close to where tenants do want to live. It also proposes a safeguard that if no social housing exists within 30 miles of a council with valuable housing, then stock should not be sold off. Housing charity Shelter has given a cautious welcome to the recommendations, with its chief executive Campbell Robb saying:

‘There is a desperate shortage of affordable housing in this country, so we very much welcome contributions to the debate on how we can build the homes ordinary families so urgently need. However, this isn’t about numbers alone. We have to make sure that any new affordable housing is built where it’s needed most, and where the jobs are.’

If this does catch the eye of ministers, it could be a useful cash generator for a scaled-up council house building programme. It will also have a political benefit: Labour tends to tie itself in knots over policies like this that it knows are popular with voters and useful for revenue but which many of its own members instinctively oppose. David Cameron and colleagues gain great pleasure from poking Ed Miliband and Liam Byrne about their to-ing and fro-ing over the household benefit cap: this may well be another policy that causes the party real strife.

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