The biggest Government sell off of all time
30 years ago this month (20th December 1979), the Housing Bill that paved the way for 2.5 million council home sales under the Right-to-Buy scheme was first published.
The scheme has been embraced by governments of all persuasions since 1979 and has enabled millions of people to get a foot on the housing ladder. HSBC, currently the UK's largest new mortgage lender, looks back at the impact of this policy, both in monetary terms and also on home ownership in Great Britain.
Key findings:
1. The Right-to-Buy ‘give away' exceeds that of all the privatisations of the 80's and 90's put together.
Since 1979, Local Authorities have received £45.38 billion capital receipts for the Right-to-Buy scheme in Great Britain. With an average discount offer of 47% on the property value over this period, the value of assets given away amounts to £40.36 billion.
Total value of council homes sold amounts to £85.74 billion, making it by far the largest privatisation initiative
The value of council homes sold exceeds the value of the entire privatisation programme put together
The present value of the stock of council houses sold off is in excess of £173.86 billion
Total proceeds of the UK's privatisation programme, also initiated in 1979 by Margaret Thatcher, amounts to £58.25 billion including £15 billion for BT in the eighties, and £12 billion from the electricity companies in the early nineties
The total estimated give away for (UK) privatisations, assuming the assets were sold at typical 20% discount (to ensure share price rises for the retail buyers) is £14.54 billion, less than half of the Right-to-Buy give away of £40.36bn
2. The Right-to-Buy has been responsible for the biggest increase in home ownership in the last 50 years.
Since 1979, 2.5 million council properties have been sold through the Right-to-Buy scheme out of an original stock of 5 million
In 1979 one in three of the country's households were council tenants. Now only 12% are council tenants (with another 7% renting from housing associations/RSLs)
In 1979 home ownership was 57%. This has risen to an estimated 70% this year. 10 out of the 12 percentage point increase is directly attributable to council house sales over the period
In the latest tax year, 2008/9, 6,694 Right-to-Buy sales have been undertaken, down from 20,430 in 2007/8. Right-to-Buy sales have been steadily reducing since 2004/5 (69,714) when incentives for buyers were reduced
The number of households in Britain has risen from 20m in 1979 to an estimated 25m in 2009. The average council house price in Great Britain at the end of 1979 was £15,528. Presently it is £101,917 a 6 fold increase
Regional Differences.
Scotland has sold off the most council houses under the Right-to-Buy scheme. 439,090 houses have been sold, representing 18% of the total for the country. Second comes London with 290,180 sold (12% of the country), and then West Midlands, with 215,310 sold (9%)
The region in the UK with the lowest number of council house sales is Northern Ireland with 117,106 for the 30 year period. Wales is second lowest with 135,607 (6% of the country)
In terms of discounts, the most generous discount (% of government giveaway) has been in Scotland (averaging 55% over the 30 year period), followed by the South West (48%). The least discounts were given in the North East and Yorkshire (44%)