Channel 4 Dispatches investigates The Great British Property Divide

There is growing fear around the government's plans to introduce an extension to the 'right to buy ' policy, with one of Britain's biggest housing associations revealing to Channel 4 Dispatches it could cost them an estimated £1.3 billion. This black hole would need to be financed through the selling off of council house stock.

Housing Associations have taken over from councils as the main providers of subsidised homes and they now house over five million people.

Earlier this year, the government announced a key election promise to extend Right to Buy to Housing Association tenants.   Under the policy, 1.3 million tenants will be able to buy their property at a reduced rate - a discount from the market value of up to one hundred thousand pounds.

The National Housing Federation the trade representative for housing associations predict that the policy could cost almost £12 billion.

Many housing associations are worried that the new scheme will leave them significantly out of pocket as they're forced to sell their best stock.


One of Britain's biggest housing associations estimates nineteen thousands of their tenants will be eligible. 

The association didn't want to be named because of business concerns, but told Channel 4 Dispatches it will cost £1.3 billion if all their tenants take it up.


Kathleen Kelly, from the Nation Housing Federation say:  "We have a very fragile system of funding new housing and it really relies on housing associations being able to say we know how many homes  we've got, we know how much they're worth and  then lenders can actually see what the value  of that is and they can lend against that.

"If we undermine that certainty by saying that housing associations no longer have control over that assets then that runs the danger of making investors  nervous and giving that housing associations have to  fund up to 85% of the cost of a new home themselves  by raising finance,  that's a real concern."


The details of right to buy haven't been finalised. But when launched the policy relied upon a complicated and controversial process of house-sales and house-building.


The government says it's going to fund the project by forcing councils to sell off their most expensive stock, which they think can raise £4.5 billion. 


Kate Allen, Property Correspondent at the Financial Times, says: "There are questions over whether the funding model stacks up.  You're asking for the sale of one council house to fund not only its replacement when construction in many high value areas is extremely expensive, land is rare, hard to come by. "


"Also it has to fund the replacement of one or more Housing Association homes."  

The government wants to sell the homes in highest value areas but these are often the ones that are least likely to become available, as tenants tend to move less often in high value areas.


In addition, not enough houses are being built. 

Just to keep up with population growth, experts say the UK needs two hundred and forty thousand new homes a year.  But between 2012 and 2013 less than Half that amount were built.


Campbell Robb, Chief Executive of Shelter told Dispatches:  "You do not solve an affordable housing problem by selling off the affordable homes that you have, it's just not the way to solve this crisis.  And the government's record on replacing, Right to Buy, in the last parliament was one in ten in some places rather than one to one.  So this is just not a programme that's gonna solve the housing."


"A few very lucky people will be able to get their own home out of it; millions will be left with nothing better than they had before", he adds.   


Experts also say selling off council houses could deepen our property divide.  Whereas once you may have upmarket homes and social housing side by side, if the council houses are sold on the open market, they are likely to be bought by better off families.

Jonathan Reades, of Kings College London told Dispatches: "It's going to reinforce that loss of sort of diversity of options for people who are, you know, looking for a place to live."


In a statement, the Department for Communities and Local Government says: 

"Anyone who works hard and wants to own their own home should have the opportunity to do so and Right to Buy helps thousands of people and families achieve their dream.

"The new Housing Bill will ensure that social tenants wanting to buy their home will now have the opportunity to do so at the same levels of discount - regardless of whether they live in a council or housing association property - with every property sold replaced on a one-for-one basis.

"More than 33,000 new homeowners have been created, since the scheme was reinvigorated in 2012, resulting in £730 million being reinvested in affordable house building - with another £1.7 billion set to be levered in over the next 2 years.

"Thanks to schemes like Right to Buy councils are now building more homes- with more council housing built since 2010 than in the previous 13 years."


The Great British Property Divide. Channel 4 Dispatches, Monday 22nd June at 8pm 

Notes to Editors 
Press contact: Peter Heneghan, Channel 4 Press Office