INVESTIGATION: Council flats line coffers of private landlords

We reveal how right-to-buy houses are ending up back in the private rented market.
We reveal how right-to-buy houses are ending up back in the private rented market.
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Buyers of council properties have been slammed for “milking the system” after figures revealed almost half of all state-owned flats sold under the right-to-buy scheme in Ashfield and Mansfield have ended up in the private rented market.

Rather than provide a low-cost option for poorer families to get onto the housing ladder as touted by the government, an investigation shows the scheme has, in some cases, been lining the coffers of private landlords.

A Freedom of Information request made to both district councils revealed 269 leasehold properties, usually flats, have been sold in Mansfield since the scheme began in 1980.

Of these, 122 owners – 45 per cent – have a different address registered with the council for correspondences, a strong indicator the buyer has sub-let the property.

In Ashfield, 189 leasehold properties have been sold and 97 – 51 per cent – have different correspondence addresses.

Information is only available for leaseholds and the councils say they have no information regarding the status of freehold properties sold.

Ashfield MP Gloria de Piero said the 'right-to-buy' had become a 'right-to-buy-to-let'.

Ashfield MP Gloria de Piero said the 'right-to-buy' had become a 'right-to-buy-to-let'.

Extrapolating the data to the the 11,000 houses sold in total by the two authorities, it could be estimated several thousand ex-council homes are now being sublet to tenants.

Mansfield District Council says its housing team has worked for years to protect the number of social houses, and, in partnership with housing association Asra, it is forming a management agreement to keep 100 social houses in the area.

The council has also built 175 affordable homes since 2014, compared with a total of 5,648 homes sold since the scheme came in.

Meanwhile there are more than 5,000 people awaiting social housing on the homefinder register.

John Haddrell, director of Mansfield-based housing association Haven Housing, says the issue may be more wide-reaching.

He says: “It’s frustrating people are milking the system.

“Initially, a lot of local authorities did sell properties to social housing providers, on the basis they would be rented out and provide a source of low- cost housing on discounted rents for the community.

“However, councils are under the cosh and it’s a valuable source of revenue, so they sell to private landlords and most of them don’t want to let to people on benefits.

“If the council wants to solve the social housing crisis, it would benefit more by working closer with us.”

Mark Spencer, Conservative MP for Sherwood, says the issue revealed councils were selling properties to people who do not need social housing

He says: “It’s important we continue with the building, so for every council house sold, another one is built.

“To a certain extent, if the stock is being replaced, it’s still doing the job of helping people to get on the ladder.

“However, what is clear from the figures about sub-letting is councils need to do better at ensuring people given council housing are in genuine need. If they actually can afford to buy on their own or to rent privately, which anyone who can sub-let is clearly able to do, I would question whether they should have been in council housing in the first place.

“That’s a major failing at a local level that needs addressing.”

Gloria De Piero, Labour MP for Ashfield says the figures were damning for the Tory government.

She says: “These figures are striking and part of a general trend where what has been branded as a ‘right-to-buy’ has become in many cases a ‘right-to-buy-to-let’, with family homes ending up in the hands of private landlords.

“As well as driving up housing costs, this will also mean the Government spends more on housing benefit, supporting low-income tenants in private rather than cheaper, social rented homes.

“The government has also only managed to replace one home for every eight sold under the ‘reinvigorated’ right-to-buy scheme since 2012, even though it promised a one-for-one replacement.”

“It slashed investment in affordable homes by 60 per cent in 2010 and the result has been the number of homes for social rent has fallen to the lowest level in two decades.”

The family of the original author of the right-to-buy scheme has been criticised previously for profiting heavily it.

The family of Ian Gow MP, Margeret Thatcher’s private secretary who was murdered in 1990, are believed to own £10 million worth of ex-council properties – branded “the great Tory housing shame”.

Paul Kenny, of trade union GMB, says: “You couldn’t make it up. The family of one of the Tory ministers who oversaw right-to-buy ends up owning swathes of ex-council homes.”

Hayley Barsby, Mansfield council director of communities, says: “People’s circumstances may change and it is possible some people living in council accommodation have incomes which would allow them to rent in the private sector or purchase their own property.

“This issue is being addressed at a central government level with the introduction of the government’s pay to stay scheme, which is due to come into effect in April 2017.”

Under this scheme tenants on high incomes will have to pay market or near market rents to remain in council accommodation.

Coun Barry Answer, Mansfield council housing portfolio holder, says: “Now the government’s focus is more on shared ownership and Right-to-Buy again, which will include housing association properties in the future.

“Right to stay will also change things – and any extra money that comes from higher rents will not be coming the council’s way, but to central government.”

Nottingham Community Housing Association, which owns homes in Mansfield, is preparing for the government’s extension in autumn.

David Simmons, NCHA head of intermediate housing, says: “Central to the right-to-buy scheme is the concept of one-for-one replacement of each home sold across the country.

“Associations get the full market value of the home sold, and are expected to show a new home is built with the proceeds.

“Tenants who buy are likely to have to repay any discount if they sell their home within a certain timescale, but will subsequently be able to sell their home on the open market.”