Private landlords have bought up half of the former council homes in some of London's poorest boroughs by exploiting Margaret Thatcher's celebrated right-to-buy scheme, an analysis reveals.
Across the capital at least 36% of one-time council homes are now rented out privately but that proportion is even higher in some of the poorest areas where average private-sector rents, often paid by tenants on housing benefit, cost as much as £230 a week more than council rents.
A report to be published tomorrow claims that the right to buy scheme, highlighted by David Cameron as one of the greatest Thatcher successes at last year's Tory party conference, is "possibly unrivalled" in providing poor value for money to both taxpayers and local authorities.
It will also raise concerns that the scheme has benefited ruthless landlords at the expense of tenants, coming in the wake of comments by one of Britain's biggest property magnates, Fergus Wilson, who now plans to evict people on benefits because they can't afford his rents.
Tom Copley, a Labour London assembly member, who compiled the report, from responses to freedom of information requests made to councils, said: "Not only did taxpayers fund the initial building of the council homes, they subsidised the substantial discounts offered to tenants and then – once the homes were sold – missed out on the rental income that would have covered the build costs. To add insult to injury, the evidence uncovered highlights that at least 36% of all homes sold by councils across London are now let by private landlords.
"Substantial numbers of these are being let to tenants who are now supported by housing benefit, while many would-be council tenants have now been forced into the private rented sector because of the dwindling supply of council homes. The consequence of both phenomena has been that taxpayers are again being charged more to subsidise higher private rents."
The prime minister sought to rejuvenate Thatcher's legacy when he declared that 2 million social tenants could buy their properties with a discount of up to £75,000. The government said 2 million occupants of social homes have bought their property since the scheme began in 1980. But sales tailed off to fewer than 4,000 a year in 2012 as discounts failed to keep up with property prices.
Launching the discounts, Cameron said: "I want more people to achieve the dream of home ownership. In the 1980s, right to buy helped millions of people living in council housing to achieve their aspiration of owning their own home."
Tower Hamlets, where four in 10 children live in poverty, has the highest proportion of homes that were sold through right-to-buy but are now believed to be privately let, at 50%. In Barking and Dagenham, home to some of the poorest London wards, 41% of homes sold through right-to-buy are now privately let; and the figure is 49% in Enfield, where a recent report suggested almost one in three children live in poverty.
Since the introduction of right-to-buy, more than 271,438 council homes have been lost from the council housing stock in London. Few of these have been replaced by governments of any political colour. Between 1998 and 2011, 880 council homes were completed in London, compared with the 85,254 sold.
In the decade between 2001 and 2011, the proportion of privately rented households with dependent children increased from 19% to 29%, highlighting a growing reliance on the sector by families. Tom Copley's report says those living in privately rented accommodation claim as much as £100 a week – £5,200 a year – more in housing benefit than council tenants in the same area.
In Tower Hamlets a tenant in a council house will pay an average of £121 a week, compared with the £212 a week paid by someone in a privately rented property. In Barking and Dagenham the difference is £58.65, and £70.78 in Enfield.
The report, From Right to Buy to Buy to Let, recommends a review and calls for mandatory covenants on all right-to-buy properties so they cannot be let through the private sector. It says a new system should be introduced whereby local authorities retain an equity stake in any property sold. Council should also have a "right not to sell" if they believe the sale of certain properties would harm their housing operation, or if they wish to retain sites for, for example, key-worker housing.
