The mayor of Tower Hamlets has slammed government policy on right to buy as figures reveal ex-council homes in the borough have been re-sold to the tune of £631million.
Since 2000 – the year the Land Registry started keeping records – some 2,931 social housing units in Tower Hamlets borough have been sold on again by former tenants.
Many were privately re-sold for more than 10 times their cost under right to buy: a divisive scheme introduced in the 1980s allowing long-standing council tenants to buy their homes at a discount.
Mayor John Biggs said: “Most people do not make a killing, but some do, clearly. I don’t begrudge anyone a home and I recognise that the Right to Buy has given many people a massive helping hand in becoming home owners, but every property sold is lost to future generations in need.
“If enough replacement affordable homes were being built that would be less of a problem.”
People in the borough who re-sold made an average profit of £133,529 – but in many cases owners earned hundreds of thousands more.
A total of 365 council dwellings were bought from Tower Hamlets for less than £25,000 and have since been sold on for a cumulative total of £75.6m.
On average properties were sold six years and two months after being purchased under right to buy, or slightly faster than the London average.
%image(14922017, type="article-full", alt="In response to the figures, mayor John Biggs said the government was "ignoring this housing crisis". Pic: Kois Miah")
But many changed hands almost immediately afterwards, with three sold within a month of purchase and 16 in less than a year.
One home bought on January 7, 2002 for £12,800 was sold on February 20 that year for £118,000, or nearly ten times its previous value.
And another tenant bought their home for £21,000 in January 2017 and sold it on just 55 days later for £355,000 - making a profit of £6,067 for every day it was owned.
As house prices in London skyrocketed, a number of former council homes were sold on for hundreds of thousands more than the original purchase price.
One property was bought from Tower Hamlets Council £18,000 in March 2001 and by the time it was next sold in September 2016, was worth £582,000.
Meanwhile, according to government statistics, the number of households waiting for social housing in the borough reached 18,808 by the end of 2017/18.
The council is currently set to deliver 2,000 new homes by 2022 but like other councils is limited in how it can spend the receipts from right to buy sales, with just 30 per cent allowed to be spent on building new homes.
%image(14922018, type="article-full", alt="The Cranbrook estate in Bethnal Green, 1969, where flats have been re-sold for up to £350,000. Picture: Submitted")
Mr Biggs added: “It is not unusual to wait over a decade for a permanent home. That is the background to our housing crisis.
“The government may argue that with the income we get from sales we can get new homes. It doesn’t work like that because the discount gives away more than the cost of a new home.
“On top of which the government ties us in red tape over what we can do with the money we receive.
“It’s clear to me that the government is ignoring this housing crisis.”
Across the UK right-to-buy homes re-sold since 2000 have made private individuals a collective £6.4bn profit, while more than a million people are on waiting lists for social housing.
In recent years there have been calls for the policy to be halted or scrapped outright in England, as it has been elsewhere in the UK.
A spokesperson for the Chartered Institute of Housing said: “We think the time is right to suspend [right to buy] to stem the loss of homes for social rent, which are often the only option for people on lower incomes.
“Not only are we failing to build enough homes for social rent: right to buy means we are losing them at a time when millions of people need genuinely affordable housing more than ever.”
Right to buy sell-ons: the national picture
Right to buy gives social housing tenants of two years or more the chance to buy their home from the local authority.
Properties are available at between 35 and 70 per cent of the market rate, depending on how long the tenant has lived there.
According to the Land Registry, between April 2000 to March 2018 some 110,000 former council houses bought under right to buy in the UK were sold on.
%image(14922019, type="article-full", alt="The Samuda Estate on the Isle of Dogs. Picture: Ken Mears")
Social housing in Britain has made private owners £6.4bn in collective profit, or £4.3bn in real terms - and £2.8bn in London alone.
According to the latest government figures, less than a third of homes bought under right to buy in England since 2012 have been replaced.
In a statement, the Chartered Institute of Housing told the BBC the policy had effectively been “Britain’s biggest privatisation”.
Tenants who sell within five years should have to pay back some or all of their discount, and those who sell within 10 years have to offer their council the chance to buy their home back first.
The government is currently reviewing right to buy and is set to extend it to apply to more people.
Housing minister Kit Malthouse MP said: “Under right to buy, the government has helped nearly two million people achieve their dream of home ownership and we are working hard to make sure that everyone in the country who wants it has a shot at getting on the housing ladder.”
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