Right-to-buy in the great rip-off economy

On the Woodberry Down estate in Hackney, all the council homes are being demolished in a £1billion regeneration project. It is a perfect illustration of why we have such a housing shortage says Koos Couvée

May 22, 2013
5 min read

 

webDSCN0221Just before the onset of Britain’s switch to a post-industrial theme-park economy, Margaret Thatcher announced her flagship Right-to-Buy policy, designed to extend the joys of home ownership to council tenants by allowing them to buy their homes at a considerable discount. In August 1980, with the passing of the Housing Act, she told working class Britons that home ownership equalled class ascendancy, would provide a safety net for future generations, and would cement tight-knit communities of long-term residents. In Thatcher’s own words: “In about 25 years’ time there will be a lot of people who will be inheriting something, because for the first time we will have a whole generation of people who own their homes and will be leaving them, so that they topple like a cascade down the line of the family. That is popular capitalism.”

But almost 25 years after these words were spoken, the form of capitalism propagated by the Iron Lady often relies for its profits on the dispossession of the very beneficiaries of this policy, particularly when the local authorities controlling the Right-to-Buy properties jump on the regeneration bandwagon. A case in point is Woodberry Down in Hackney, one of London’s biggest council estates, where all council homes are being demolished as part of a £1billion regeneration project. Located next to Finsbury Park and in close proximity to Manor House tube station, the area is regarded as deprived but with assets and land all too valuable to remain in public hands.

With funding for new social housing having dried up decades ago, the model for the regeneration of this estate is known as ‘self-financing’. According to Hackney Council, Woodberry Down is becoming a “vibrant mixed community of choice” – all 2,000 council homes will be demolished to make way for a much higher density estate of 4,600 new homes funded by the sale of apartments on the private market. Council tenants will in future be renting from a housing association instead of the local authority. The tenure mix is changing from change from 67 per cent social rented and 33 per cent leaseholders with Hackney Council, to 41 per cent ‘affordable homes’ (comprised of rented accommodation, shared equity and shared ownership properties – more on this below) and 59 per cent privately owned. The sale of private flats by Surrey-based developer Berkeley Homes over two decades will ensure the firm – which noted annual profits before tax of £214.8million in 2012 – reaches what is believed to be their target of 21 per cent profit as agreed in the deal with Hackney Council.

Residents remaining in phase II, the next part of the estate scheduled for demolition, are all leaseholders – those who purchased their council house or flat by exercising their right to buy. Hackney Council will pay them the ‘market value’ of their property, a home loss payment of 10 per cent of that value, and a disturbance allowance of around £5,000 for the loss of their homes. Residents can take this money and buy a new property in the open market. But compensation – based on ‘real market value’, according to the council – is not enough to buy a similar property in Hackney, a heavily gentrified inner London area that has seen house prices increase dramatically over the last ten years. The average price for a property in the borough in December 2012 was £397,873.

Valuations of £210,000 for three bedroom council flats are the norm here, but most of the new builds sold by Berkeley Homes – many to investors in Hong Kong and Singapore – are twice, three or four times the value of the old council flats. Leaseholders simply cannot afford to buy them. They can however purchase a shared equity property with the housing association in one of the new builds, but the financial requirements automatically rule out most people. For this arrangement to work the old property needs to be worth at least 70 per cent of the value of the new property, an annual income of around £30,000 is required and deposits are high. The shared ownership option is even less attractive, because leaseholders would have to take out a mortgage and pay rent. The result? Those who believed buying their council home would allow them to retire within the community they have contributed to for decades, having paid off the homes they hoped to pass on to a next generation, are basically told they are no longer wanted.

As a result of the disastrous lack of any credible industrial strategy by successive governments, London’s economy has become increasingly based on investors pumping money into the acquisition of assets which are assumed will rise in value indefinitely. Council tenants sitting on valuable land have to be disposed of, as the public becomes private, and council home owners on modest incomes are thrown into to competition with their wealthier counterparts in one of the most unequal cities in the Western world. Olympic legacy-boasting Hackney Council are not particularly concerned, as they are an authority run by the type of Labour politicians who seem to think the problem of deprivation is solved simply by displacing it. Perhaps they are blinded by the sight of shiny brochures, or simply unaware that this is indeed the Great Rip-Off – a temporary solution which can quickly become a crisis of asset values with strong links to property, when the bubble bursts. The next crash, which may see them becoming surplus to the requirements of this theme-park economy themselves, may leave them wondering – whatever happened to our communities?

 

 

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.
Share this article  
  share on facebook     share on twitter  

Contagion: how the crisis spread
Following on from his essay, How Empire Struck Back, Walden Bello speaks to TNI's Nick Buxton about how the financial crisis spread from the USA to Europe

How empire struck back
Walden Bello dissects the failure of Barack Obama's 'technocratic Keynesianism' and explains why this led to Donald Trump winning the US presidency

Empire en vogue
Nadine El-Enany examines the imperial pretensions of Britain's post-Brexit foreign affairs and trade strategy

Grenfell Tower residents evicted from hotel with just hours’ notice
An urgent call for support from the Radical Housing Network

Jeremy Corbyn is no longer the leader of the opposition – he has become the People’s Prime Minister
While Theresa May hides away, Corbyn stands with the people in our hours of need, writes Tom Walker

In the aftermath of this disaster, we must fight to restore respect and democracy for council tenants
Glyn Robbins says it's time to put residents, not private firms, back at the centre of decision-making over their housing

After Grenfell: ending the murderous war on our protections
Under cover of 'cutting red tape', the government has been slashing safety standards. It's time for it to stop, writes Christine Berry

Why the Grenfell Tower fire means everything must change
The fire was a man-made atrocity, says Faiza Shaheen – we must redesign our economic system so it can never happen again

Forcing MPs to take an oath of allegiance to the monarchy undermines democracy
As long as being an MP means pledging loyalty to an unelected head of state, our parliamentary system will remain undemocratic, writes Kate Flood

7 reasons why Labour can win the next election
From the rise of Grime for Corbyn to the reduced power of the tabloids, Will Murray looks at the reasons to be optimistic for Labour's chances next time

Red Pepper’s race section: open editorial meeting 25 June
On June 25th, the fourth of Red Pepper Race Section's Open Editorial Meetings will celebrate the launch of our new black writers' issue - Empire Will Eat Itself.

After two years of attacks on Corbyn supporters, where are the apologies?
In the aftermath of this spectacular election result, some issues in the Labour Party need addressing, argues Seema Chandwani

If Corbyn’s Labour wins, it will be Attlee v Churchill all over again
Jack Witek argues that a Labour victory is no longer unthinkable – and it would mean the biggest shake-up since 1945

On the life of Robin Murray, visionary economist
Hilary Wainwright pays tribute to the life and legacy of Robin Murray, one of the key figures of the New Left whose vision of a modern socialism lies at the heart of the Labour manifesto.

Letter from the US: Dear rest of the world, I’m just as confused as you are
Kate Harveston apologises for the rise of Trump, but promises to make it up to us somehow

The myth of ‘stability’ with Theresa May
Settit Beyene looks at the truth behind the prime minister's favourite soundbite

Civic strike paralyses Colombia’s principle pacific port
An alliance of community organisations are fighting ’to live with dignity’ in the face of military repression. Patrick Kane and Seb Ordoñez report.

Greece’s heavy load
While the UK left is divided over how to respond to Brexit, the people of Greece continue to groan under the burden of EU-backed austerity. Jane Shallice reports

On the narcissism of small differences
In an interview with the TNI's Nick Buxton, social scientist and activist Susan George reflects on the French Presidential Elections.

Why Corbyn’s ‘unpopularity’ is exaggerated: Polls show he’s more popular than most other parties’ leaders – and on the up
Headlines about Jeremy Corbyn’s poor approval ratings in polls don’t tell the whole story, writes Alex Nunns

Job vacancy: Red Pepper is looking for a political organiser
Closing date for applications: postponed, see below

The media wants to demoralise Corbyn’s supporters – don’t let them succeed
Michael Calderbank looks at the results of yesterday's local elections

In light of Dunkirk: What have we learned from the (lack of) response in Calais?
Amy Corcoran and Sam Walton ask who helps refugees when it matters – and who stands on the sidelines

Osborne’s first day at work – activists to pulp Evening Standards for renewable energy
This isn’t just a stunt. A new worker’s cooperative is set to employ people on a real living wage in a recycling scheme that is heavily trolling George Osborne. Jenny Nelson writes

Red Pepper’s race section: open editorial meeting 24 May
On May 24th, we’ll be holding the third of Red Pepper’s Race Section Open Editorial Meetings.

Our activism will be intersectional, or it will be bullshit…
Reflecting on a year in the environmental and anti-racist movements, Plane Stupid activist, Ali Tamlit, calls for a renewed focus on the dangers of power and privilege and the means to overcome them.

West Yorkshire calls for devolution of politics
When communities feel that power is exercised by a remote elite, anger and alienation will grow. But genuine regional democracy offers a positive alternative, argue the Same Skies Collective

How to resist the exploitation of digital gig workers
For the first time in history, we have a mass migration of labour without an actual migration of workers. Mark Graham and Alex Wood explore the consequences

The Digital Liberties cross-party campaign
Access to the internet should be considered as vital as access to power and water writes Sophia Drakopoulou

#AndABlackWomanAtThat – part III: a discussion of power and privilege
In the final article of a three-part series, Sheri Carr gives a few pointers on how to be a good ally


36