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Warning over Right to Buy plans

Published 24/04/2015

The IFS said extending the Right to Buy to housing association tenants could reduce affordable housing
The IFS said extending the Right to Buy to housing association tenants could reduce affordable housing

Tory plans to extend the Right to Buy to housing association tenants could reduce affordable housing and create wider gaps between "rich" and "poor" areas of towns and cities, the Institute for Fiscal Studies (IFS) said.

The offer of generous discounts to up to 1.3 million householders is a centrepiece of the party's manifesto - seeking to emulate the electoral success of the original policy that helped sweep Margaret Thatcher to power in 1979.

But the IFS said it was concerned over a combination of " considerable uncertainties" about the planned financing of the proposal and the party's "less than impressive record" of replacing homes bought by council tenants.

Under the proposals, housing associations would be compensated for being forced to sell their assets at below market value from the proceeds of forcing local authorities to sell their most expensive properties as they become vacant.

The IFS said paying for the potentially multibillion-pounds "giveaway" by selling public assets " would worsen the UK's underlying public finance position".

Reducing the stock of housing in the most expensive areas - by selling top-value council properties - could result in a boost to social housing building but would also "create clearer divisions between areas where richer and poorer households are located".

And there were "considerable uncertainties surrounding the revenues that can be raised from sales of expensive properties, the costs of Right to Buy discounts and the cost of replacing sold properties", its analysis concluded.

"These reflect both genuine difficulties in predicting the effect of the policies and a lack of detail in the Conservative Party's announcement.

"Given this uncertainty, and the coalition's less-than-impressive record in delivering replacement social housing under the existing Right to Buy, there is a risk that these policies will lead to a further depletion of the social housing stock - something the proposal explicitly seeks to avoid."

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