The ability of the tenants of local authority housing to buy the property and therefore change to the status of owner-occupier although available before 1980 became a major feature after the 1980 Housing Act, when tenants could purchase at a discounted price, and is generally referred to as ‘The Right to Buy’.
Summary
Since 1980 over 10,000 dwellings were sold under the Right to Buy programme in Cornwall. Although initially it led to an increase in owner-occupied households, in recent years Cornwall has seen a dramatic increase in the private rented sector with owner-occupation levels falling back.
Overall view
“The right to buy was conditional on the length of tenancy. It extended to local authority tenants of three or more years. A discount was offered to help tenants, who were often on low incomes. The minimum discount was 33%, increasing by 1% for every further year of tenancy above three years. The maximum discount could not exceed £50,000, equivalent to just over £200,000 in 2022. These discounts had to be paid back if the property was sold within five years. Tenants also had the right to a mortgage from their local authority.” [Eardley, F.,17 June, 2022, Right to buy: Past, present and future, In Focus, Housing, House of Lords.]
Since the 1980 Act, various changes have been made depending on the political nature of the Government resulting in smaller discounts under the Labour Government of 1997-2010, with larger discounts available under the Conservative/Liberal Democrat coalition after 2010.
“A combination of the reduction in the rate of construction of social housing and sale of local authority housing led to a reduction in the availably of social housing in England. Government figures show a reduction from 5.5mn in 1980 to 4.1mn in 2021.”
Results from a survey in 2017 indicated that 40% of homes, which had been bought under the auspices of Right to Buy ended up in the private rented sector.
Several significant changes have taken place in the housing market since 1980. The share of owner-occupation rose from 58% in 1981 to 69% in 2001, but then fell back to 63% in the 2016-18 period. The social rented sector declined while the private rented share increased. The table below shows the share by tenure from 2001 to 2021. The private rented sector is now larger than the social rented.
Tenure % share - England
Tenure | 2001 | 2011 | 2021 |
Owner-occupied | 68.0 | 63.3 | 61.3 |
Social rented | 19.3 | 17.7 | 17.1 |
Private rented | 8.8 | 16.8 | 20.5 |
Other | 3.9 | 2.1 | 0.1 |
Source: ONS/NOMIS, census data.
Generally the private rented sector is regarded as less secure for tenants while research by the insurer Royal London showed that retirees living in the sector might need higher savings than owner-occupiers to maintain their living standards. Levels of owner-occupation have declined largely amongst younger age groups.
The situation in Cornwall
A total of 10,551 dwellings were sold under RTB in Cornwall between 1980 and 1017-18. It is therefore interesting to see how tenure has changed since 1981. Over the number of dwellings has increased by 66%, but while owner-occupation rose by 63%, private sector numbers increased by 151% compared to an 8% increase in social housing (Local Authority and Housing association).
The table below sets out changes in tenure using census data.
Tenure - numbers Cornwall
Tenure/year | 1981 | 1991 | 2001 | 2011 | 2021 |
Owner occupied | 102062 | 136263 | 154115 | 158524 | 165958 |
Shared ownership | 1434 | 1757 | 2949 | ||
Local Authority/Housing assoc | 29582 | 21071 | 25396 | 27655 | 32039 |
Private rented | 19636 | 25622 | 25093 | 38605 | 49371 |
Rent free | |||||
Total | 151280 | 182956 | 214814 | 230389 | 250533 |
Source: NOMIS/Census. [Excludes properties used as second homes or holiday lets].
Looking at the % share for each tenure, it is noticeable that for owner-occupation, after rising between 1981 and 1991 to peak at 74.5%, the figure fell back and now stands at 66.2%. Social housing was at its highest in 1981 when it accounted for 19.6% of all tenures. It fell dramatically by 1991, the consequence of Right to Buy down to 11.5%. Since then it has risen slightly to stand at 12.8%. The private rented sector was the smallest of the three main categories in 1981 with 13%, it increased to 14% in 1991 then fell back in 2001. Since then it has risen steadily and in 2021 was 19.7%.
Tenure % share - Cornwall
Source: NOMIS/Census. [Excludes properties used as second homes or holiday lets]. | 1981 | 1991 | 2001 | 2011 | 2021 |
Owner occupied | 67.5 | 74.5 | 71.8 | 68.8 | 66.2 |
Shared ownership | 0.7 | 0.8 | 1.2 | ||
Local Authority/Housing assoc | 19.6 | 11.5 | 11.8 | 12 | 12.8 |
Private rented | 13 | 14 | 11.7 | 16.8 | 19.7 |
Rent free | 4.1 | 1.7 | 0.1 | ||
Total | 100 | 100 | 100 | 100 | 100 |
Source: NOMIS/Census. [Excludes properties used as second homes or holiday lets].
A history of local authority sales.
“Sales of local authority housing prior to the Housing Act 1980 were relatively limited. Between 1957 and 1960, 16,000 council houses were sold in England. The 1980 act led to a surge in sales. Over 100,000 properties were sold for each of the first three full financial years following the passing of the act. A review published in the Journal of Housing Economics suggested high initial sales were due to pent-up demand from older tenants. These tenants qualified for high discounts from their long tenancies.
The number of sales declined after the first few years. Government figures show that a peak of 167,123 houses were sold in the 1982/83 financial year. Sales fell to between 70,000 and 100,000 a year for the following four financial years, from 1984 to 1988. Sales again increased to over 130,000 a year between 1988 and 1990. The gradual decline in sales was in part due to dissipation of initial demand. Rising unemployment and high interest rates also caused demand to fall away.
Sales fluctuated from the early nineties onwards until the Housing Act 2004. Sales were between 30,000 and 70,000 a year from 1991 to 2005. This declined from the 2004/2005 financial year onward reaching an average of fewer than 4,000 sales per year in the 2008/09 to 2012/13 financial years. Sales increased from 2012 onwards, but numbers have not returned to levels seen prior to the 2007/08 financial year.”
[Eardley, F.,17 June, 2022, Right to buy: Past, present and future, In Focus, Housing, House of Lords.]
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