Right To Buy now costs £2bn extra annually in housing benefit paid to tenants in ex-council homes

[Tony Gosling]

And today Housing Minister Grant Shapps announced 
on Radio 5 live that even with the present 
housing benefit cap, bedroom tax and other cuts
latest figures indicate the present annual £22bn 
Housing Benefit bill will continue to grow by 
+£2bn every year until the end of the recession
Tony

Up to £2bn in extra housing benefit being paid 
out to tenants in ex-council homes - report
Published by Ross Macmillan for 24dash.com in 
Housing and also in Central Government, Communities, Local Government
Wednesday 8th August 2012 - 2:04am
http://old.24dash.com/news/housing/2012-08-08-Up-to-2bn-in-extra-housing-benefit-being-paid-out-to-tenants-in-ex-council-homes-report
Up to £2bn in extra housing benefit being paid 
out to tenants in ex-council homes - report
It could be costing the Government as much as 
£2bn-a-year extra in housing benefit to support 
tenants in the private sector now renting 
ex-council homes sold through the Right-to-Buy, according to a new report.
That estimate comes from a People, Place and 
Policy paper looking at the impact of 
Right-to-Buy re-sales on the £22bn-a-year housing benefit bill.
Around 2.5 million homes have been sold in the UK 
after Margaret Thatcher brought in the Right-to-Buy (RTB) over 30 years ago.
However, in a significant number of cases, the 
homes have ended up in the private rented sector, 
after being resold by tenants.
This has cost the Government more in housing 
benefit to support tenants in those homes than if 
the properties had remained at council rents.
A study in 2003 showed that 21% and 31% of houses 
bought under the RTB within approximately three 
years were no longer owner-occupied on estates in 
Lambeth and Camden respectively. Another study 
estimated around 20 per cent of Birmingham’s RTB 
sales were in the Private Rented Sector (PRS) by 2001.
Nationally, around a third (1.6 million) of the 
private rented sector is either partly or wholly 
funded through housing benefit.
Drawing on analysis from Renfrewshire in Scotland 
– where 57 per cent of the original council stock 
has been sold since 1981 – the paper estimated 
that ex-RTB homes are the source of over 40 per 
cent of Local Housing Allowance (LHA) claims in three council areas.
It estimated that the 1,526 claims of LHA in 
Renfrewshire from ex-RTB stock at £40/week extra 
was costing an estimated £3.2m more per year than 
if the stock had remained with the council.
Applying a similar method when analysing the 
impact in North London borough, Camden – which 
has sold nearly 10,000 council homes – it 
estimates the Government could be paying as much 
as £18.7m a year extra through LHA on RTB stock.
Extrapolating the figures, the paper estimates 
the extra costs of housing LHA claimants in 
ex-RTB stock is between £0.5bn and £2bn a year, based on different assumptions.
Any errors contained in its speculations, it 
said, “would mainly involve under-estimates”.
It said the final figure of a possible £2bn/year 
additional expenditure “significantly exceeds the 
income generated through RTB capital receipts in 
any single year of the past decade”.
The paper noted: “Far from generating income for 
new housebuilding, extending the RTB may simply 
increase the annual burden of rent support on the 
Treasury with a net loss overall, every year, for 
the foreseeable future even at the new LHA rates.”
It said that any appraisal of the RTB, and 
consideration of its future expansion needs to 
recognise this “unanticipated consequence of commodification”.
The report concluded: "The UK government has 
capped LHA payments and reduced household 
entitlements as it baulks at the rising costs of 
market rents for housing that are the outcome of 
its deregulation and marketisation policies."
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