Towards the end of 1979, Michael Heseltine unveiled a policy that, according to him, “would lay the foundation for one of the the most important social revolutions of this century”. Heseltine, then Margaret Thatcher’s environment secretary, announced the government’s plans to give council tenants the right to buy their homes at a discount. It is no exaggeration to say that its announcement has irreversibly damaged the British property market.

Heseltine was right that the right to buy would trigger a social revolution (although perhaps not of the kind he intended). The introduction of this policy followed more than a decade of prolific house building in the UK. Thanks to the efforts of Harold Wilson’s government, the proportion of council housing increased from 42 per cent to 50 per cent of the total and 400,000 houses were built a year. Right to Buy undid much of that work.

This “social revolution” has seen the sale of 2 million social homes since 1980, many of which have not been replaced. This has been accompanied by a steady decline in council housing construction in the four decades since; In 1980, 94,140 new social housing units were built. According to the Social Housing Regulator, in the year ending 31 March 2024, the UK built just 700 social homes. For comparison, in 2022-23, the UK sold 14,085 social homes through right to buy schemes.

Part of this decrease depends on the fact that until 2023, municipalities had to deliver 25 percent of the funds generated by the sale of a municipal home to the Treasury. This is compounded by the fact that any home sold through Right to Buy is sold at a discount. Municipal properties were therefore sold for less than their real value and local authorities were only allowed to keep 75 percent of the money. It makes sense, then, that their replacement programs haven’t been able to keep up. This is a loss-making exercise for the council.

As a result, the UK’s social housing stock has shrunk, fueling waiting lists and pushing would-be social tenants into the increasingly extortionate private rental sector. The loss of property has meant that many households, who would be entitled to social property, spend excessive amounts of time living in temporary accommodation. For some families, this may mean an extended period of living in a B&B or basic hotel.

This is expensive for the State. According UK Housing Review Autumn ReportPublic spending on housing is at an all-time high: £30.5bn spent in 2021-22, compared to £22.3bn in 1975-76 in real terms. In the 1970s – towards the end of the Wilson government – ​​95 per cent of this money was spent on housing construction. Now it is only 12 per cent and the rest goes to housing benefits. This basically amounts to a state subsidy to homeowners.

The government is clearly aware of the damage caused over the 44-year history of the Right to Buy. On Wednesday, Rachel Reeves confirmed that the government would allow councils to retain 100 per cent of Right to Buy revenue (a policy tried and discarded by the previous Conservative government). It also confirmed a reduction in the right to buy discount. But while these policies may be a balm, they are not a silver bullet.

The Labor bench seems reluctant to scrap the policy entirely. In an interview in 2022, Matthew Pennycook, now Housing MinisterHe said “we have to turn off the tap so we can buy,” but warned: “I’m not sure that requires you to abolish it.” Angela Rayner, who bought a property through Right to Buy, has also been coy about it. Speaking to Laura Kuenssberg in September, he said he wanted the policy to continue, but that it had to be “fairer” for the taxpayer. The defense put forward by most Labor ministers is that working-class social housing residents should retain the right to buy their homes.

But not everyone is so ambiguous. In Manchester, Andy Burnham has gone one step further. In May, the city’s mayor called for the right to buy to be suspended after claiming it was the reason the housing crisis had “become worse every year”. Kwajo Tweneboa, a vocal supporter of social housing, has also called for the policy to be scrapped. He described the plan as “the most damaging policy introduced in respect of social housing”.

It is difficult to see how this government – ​​like any government! – can drive a truly successful social housing building program with the right to buy still in place. The policy is a sieve for the UK’s council housing stock: councils are simply unable to match the replacement rate with the sales rate. Perhaps getting rid of the right to buy is – like many others – a difficult decision that the government is not yet prepared to make. But the flaws of this policy are clear; keeping it may save votes, but it certainly won’t save money. And as long as it persists, the real estate crisis will only intensify.