Benefits-to-bricks: a flawed plan?

Last week the Government threw out a series of “red meat” policies designed to shore up Boris Johnson’s position, said Bob Kerslake in The Guardian. One of them ought to cause “real concern”. The “Benefits to Bricks” scheme would allow housing association tenants to buy their properties, for up to 70% less than their market value, and to pay their mortgages using housing benefits. This rehashing of Margaret Thatcher’s flagship right-to-buy policy for council homes is still at the drawing-board stage. “It should stay there.” The most obvious problem is that housing association properties aren’t actually the Government’s to sell: they belong to the associations, which are mainly charities. Were the associations to be forced to sell their properties, they’d need to be compensated for any discounts, so that the homes could be replaced; but would they be? The Tories have never made good on the shortfall in social housing created by the original right-to-buy policy, although they promised they would. When this new policy was first mooted, in 2015, Johnson – then mayor of London – called it “the height of insanity”. He was right.

Predictably, this plan has prompted “howls of outrage from the Left”, said The Daily Telegraph. But Thatcher’s right-to-buy policy was genuinely “transformative”. It allowed millions to become part of a “property-owning democracy”; it gave them “a stake in capitalism”. There’s no reason why right-to-buy shouldn’t be repeated, using housing association stock. If the associations’ higher-value properties were sold, the proceeds could be “ploughed back” into building more affordable homes.

In a way, it makes sense, said Lex in the FT. Helping people to buy their homes is arguably a better use of the government housing budget than helping them to pay their rent. But who would the policy actually work for? It would only apply to first-time buyers, so would likely benefit “only a few thousand people”.

It might not even do that, said Tom Peck on The Independent. To pay a mortgage you first need to buy a home, which requires a deposit, and if you have more than £16,000 in savings you’re no longer eligible for benefits. Yes, Johnson talked of introducing 98% mortgages, said Emma Haslett in The New Statesman. But if such mortgages were offered to people without savings – overriding Bank of England rules against borrowing more than 4.5 times your income – it would trap people in “huge amounts of debt”. This policy, like many schemes before it, suggests the Tories will perform all kinds of contortions rather than face the basic problem: “that the UK doesn’t have enough homes”.