Forums General chat Is it time Right to Buy was stopped Reply To: Is it time Right to Buy was stopped
#349
karen
18 Posts

No. Right to buy is fine in principle. People who have paid rent for a long time getting the ability to buy the house. It’s more like a state supported long term mortgage.

What is wrong is councils not maintaining a stock of social housing and not keeping the house prices low.

Think about how land becomes houses. It starts as land. It has little value, a field, maybe too small to farm. Or spare fallow ground at the edge of a previously developed area (old industrial site, old train line). The council grant planning permission. The value increases. The developers buy it and build houses. They need to make a profit and they need to generate revenues that support purchase of this expensive commodity. So land worth a few thousand, becomes worth £100k. The bricks and fixtures add £50k and the house sells for £200k.

If the council purchased the land at land rates, using revenue from previous sales. Granted permission to build and leased the land to the builder to build houses. The capital outlay to build the houses is lower, so small firms could get involved to build a dozen houses rather than the big housing companies. They would build the house and sell at a profit along with the individual plot of land that would be sold from the council.

The council could make a small mark-up, the builder would make a profit, and the whole house would be for sale for maybe half what the big boys sell them for. The council can have tendered the right to build the houses based on a unit price for the final sell so they could limit the price.

This would feed new houses in at an affordable rate. It would force down the rental prices, and reduce the viability of buy-to-let. Leaving more of the large housing stock at affordable prices. The whole housing market would reduce in cost per size, the losers would be investors in property – who due to the timescale of this taking effect would not so much lose money but exit with little further gains. With rent / mortgage lowered there would be more cash back in the economy, lower paid jobs would be less tight and fewer people would be on the breadline.