«Mixed Messages on Mixed incoMes Volume 15, Number 2 • 2013 U.S. Department of Housing and Urban Development | Office of Policy Development and ...»
Right to Buy in the United Kingdom The RTB legislation was introduced in the 1980 Housing Act by Thatcher’s Conservative government, elected in 1979. As mentioned in the Introduction, RTB significantly transformed the British housing market. The key to the large sales numbers was the discount given on the market prices.
In the original RTB legislation, the discounts started at 33 percent and increased 1 percent for each additional year of tenancy, up to a maximum of 50 percent (Jones and Murie, 2006). The primary reason for these sales was to stimulate homeownership and to respond to the desire of some tenants to own their properties (van Ham et al., 2012). The large volume of houses sold under RTB since 1980 has contributed significantly to the radical changes in the distribution of dwellings by tenure (see exhibit 1).
These data also show that the current economic crisis has caused the percentage of homeownership to drop and the percentage of private renting to increase. The most notable change was that since the early 1980s, the share of social housing has dropped from 31 to 18 percent in 2011.
Most of this change is because of RTB (Jones and Murie, 2006).
Initially, RTB gave only those living in council housing—that is, social housing owned by local councils—the right to buy their dwelling. This right was later extended to tenants of other social landlords, such as housing associations. Over the years, changes and regional variations in the policies (including the rules and discounts) have incrementally introduced a high level of complexity into the RTB legislation (see Jones and Murie, 2006, for an excellent overview). The number of sales has differed regionally and fluctuated greatly, with peaks in 1982 and 1989. Because of all the changes in the policy over time and the regional differences in the RTB policy, it is not possible to speak of a “single” RTB policy. Different rules apply in the four countries that make up the United Kingdom: England, Northern Ireland, Scotland, and Wales. For example, in Scotland, it has been possible for some time for the government to identify RTB exclusion zones in housing markets that are under pressure. Also, the Scottish government’s 2010 Housing Act ended RTB for new tenants because of concerns about a shortage of affordable rental homes (Scottish Government, 2012). A recent consultation in Scotland showed that most Scottish councils want RTB for council and social housing to be scrapped completely (BBC, 2012). In England, new tenants can still execute their RTB.
The main objective of RTB was to sell public housing and stimulate private ownership. RTB was seen as an end in itself, and not as a means to achieve any other housing or urban policy (Jones and Murie, 2006). Also, before the 1980 Housing Act, local authorities were already selling dwellings. The main change the RTB legislation brought was that social housing tenants now had the right to buy their dwelling. Creating mixed-tenure neighborhoods was never an explicit objective of the RTB legislation, but it was later seen as a welcome side effect of the policy (Tunstall, 2011).
RTB has contributed greatly to the establishment of mixed (tenure) communities in the United Kingdom, but Tunstall (2011) pointed out that even before RTB came into existence, very few neighborhoods were 100 percent monotenure (depending on the scale used; the larger the neighborhood, the more mixed).
Over the years, RTB became a standard policy instrument in urban regeneration programs to create mixed communities (Jones and Brown, 2002). Urban regeneration programs often consist of selective demolition of social housing, estate redesign, improvements of the existing housing stock, new construction, and upgrading local facilities (Jones and Murie, 2006). The idea was that this upgrading of neighborhoods would encourage existing residents to execute their RTB and purchase their rented houses, eventually leading to more mixed communities. RTB had differential effects on tenure and social mix in various estates, which is one of the neighborhood outcomes that we will deal with extensively in the next section. We will also explain which (other) types of neighborhood outcomes have been under our scrutiny and why.
Analyzing Neighborhood Outcomes of the Right to Buy By comparison with the attention given to the effects of RTB on the socioeconomic outcomes of tenant buyers, far less attention has been given to the effects of RTB on neighborhoods. The general
discourse on RTB has tended to identify singularly positive (stability) or negative (residualization) effects on neighborhoods, often without acknowledging the inherent complexity and sometimes contradictory nature of concepts such as stability and tenure mix, or underestimating the fact that comparable sale levels in roughly comparable neighborhoods have led to hugely varying effects, depending on the local and regional housing market context. Therefore, in our analyses of the literature, we have chosen to start from neighborhood-related concepts in the RTB goals (for example, stability and sustainable communities) and concepts that were never part of, or an explicit objective of, the RTB legislation but were applauded by policymakers as welcome side effects, such as tenure mix (see Tunstall, 2011). Very early in our meta-analysis, it appeared that “sustainable communities” often referred to buying into homeownership without moving (that is, stability), to social interactions (and social cohesion), and to maintenance levels. These concepts are much better indicators of neighborhood effects than sustainable communities. Thus, we will synthesize RTB outcomes for five types of neighborhood outcomes: residualization, neighborhood stability, tenure and social mix, social interactions, and dwelling maintenance. We deliberately exclude the voluminous literature about the socioeconomic effects for individual households that are tenantbuyers or buying a former RTB dwelling on the private market (resales). In the following section, we start with the most notorious outcome of RTB: residualization.
Residualization In the critical scientific discourse, RTB has become most (in)famous for its residualization effect on the social housing sector in the United Kingdom (Cole and Furbey, 1994). The term residualization broadly refers to two processes (see Burrows, 1999). First, it refers to growing concentrations of the lowest income and most disadvantaged households in the socially rented sector. Second, residualization refers to a shrinking social housing stock that increasingly consists of the lowest quality dwellings in the most deprived neighborhoods. In the following paragraphs, we analyze how residualization arose through various processes in relation to RTB.
The first and foremost question is: Which households used their right to buy? Not surprisingly, these households were generally the better off, economically active tenants with at least one income from paid employment and often two earners in the household (Forrest and Murie, 1984a, 1984b; Jones and Murie, 2006; Kerr, 1988; Lynn, 1991; Munro, 2007; van Ham et al., 2012).
Tenant buyers also tended to be from higher social classes with white-collar, skilled, or semiskilled occupations (Williams and Sewel, 1987; cited in van Ham et al., 2012). In terms of household features, most tenant buyers were middle-aged or older married couples with nondependent children, especially during the early years of RTB (Forrest and Murie, 1988).
The second question is: What were the characteristics of the council dwellings sold under RTB?
The more attractive properties in the most attractive neighborhoods generally sold to sitting tenants. These properties were often larger single-family dwellings rather than flats (Dunn, Forrest, and Murie, 1987; Forrest, Gordon, and Murie, 1996; Forrest and Murie, 1990; Foulis, 1985; Jones and Murie, 1999: Scottish Executive, 2006). The more desirable properties were also often in more desirable and attractive areas, in terms of residential environment and housing market position.
Dunn, Forrest, and Murie (1987) showed that RTB sales have been highest in areas where owner occupation was already at high levels and where the initial stock of council housing was relatively
small (see also Foulis, 1985; Jones and Murie, 1999; Scottish Executive, 2006). This pattern of sales has resulted in a council housing stock increasingly characterized by flats, unconventional buildings, and poorer quality neighborhoods (Munro, 2007).
More fundamentally, the selective uptake of RTB by economically active households has resulted in a council sector with growing concentrations of economically inactive and low-income residents, among them tenants with structural health problems or disabilities, single parents, and elderly people (Forrest and Murie, 1988). These residualization forces, through changes in the council housing stock and its population, work in conjunction with the desirability of neighborhoods.
In urban areas the coincidence of Right to Buy sales and a period of widening social inequality has exacerbated the funneling of poorer sections of the community or marginalized groups into the least desirable estates. Obtaining a house in these neighbourhoods, whatever condition and quality, demonstrates some elements of social disadvantage by tenants. At the same time the changes in the characteristics of the council tenant population, encouraged by the Right to Buy siphoning off those with financial resources, has meant that the council housing stock is subject to higher turnover. The Right to Buy has therefore destabilised the remaining council housing stock and the least desirable estates in particular. This has inevitably increased social exclusion and economic marginalisation and reduced the sustainability of communities in these areas through the instability of local populations. (Jones and Murie, 2006: 153) The residualization trends described by Jones and Murie have another negative side effect. From the turn of the century, needs-based letting of social housing has received increasing focus in the United Kingdom (Fitzpatrick and Pawson, 2007). According to Munro (2007), this focus means that a greater proportion of new lettings have gone to those households with the greatest needs, such as homeless people (Fitzpatrick and Pawson, 2007). Households now moving into the sector are less affluent than the out-movers, resulting in social housing with residents who are more narrowly based socially and economically (Burrows, 1999; see also Forrest and Murie, 1990; Power and Tunstall, 1995). The combination of residualization and needs-based letting contributed to stigmatization of social housing, confirming “its position as ‘welfare’ housing of last resort, only for those with no other options” (Munro, 2007: 249).
It would be incorrect to put the sole blame for residualization on RTB, however. For example, Burrows (1999) argued that the process of residualization has not been only because of changes in tenure, but also because of the intensification of processes of residential movement by people, which can be traced back to at least the mid-1970s (Lee et al., 1995). Munro (2007) acknowledged that RTB promoted homeownership, but this outcome was already on an upward trajectory because of other factors. She referred not only to the dominant ideological discourse favoring homeownership, but also to other programs, such as stock transfers to housing associations. Dunn, Forrest, and Murie (1987: 58) argued that “higher discounts, rising rents, changing interest rates, and other external factors related to the uneven effect of the recession [during the 1980s] may have generated additional sales in areas where many tenants had already bought.” It has also been suggested that more substantial investments in new and good-quality, socially rented housing through the period
of RTB would have lowered residualization levels to some extent (Munro, 2007). The quote from Jones and Murie (2006: 153) on residualization also reveals that RTB has implications for the stability of neighborhoods, an issue to which we turn in the next section.
Neighborhood Stability It is argued that neighborhood stability—that is, low residential turnover levels—benefits social interactions, social capital (DiPasquale and Glaeser, 1999; Rohe, McCarthy, and Van Zandt, 2000), and trust in the neighborhood (McCabe, 2012). The general premise is that raising homeownership levels lowers residential turnover, and thus increases stability in neighborhoods, which is good from the perspective of sustainable communities. Jones and Murie (2006) referred to the wider received wisdom that sees RTB and the development of owner occupation as key to increasing stability on estates and reducing the problems of economic and social inequality. Jones and Murie acknowledged that RTB can meet the increasing aspirations of households to buy a home in their local communities, either immediately or subsequently through resales. They also revealed counter concerns, however, that RTB sales may have destabilizing effects on neighborhoods in various ways.
It appears that the relationship between neighborhood stability and increasing homeownership levels through RTB is far from straightforward. We will discuss five issues related to neighborhood stability. The first issue concerns time: stability in the short term (that is, directly after a wave of RTB sales to sitting tenants), and in the longer term (depending on resales of RTB dwellings by former tenant buyers).
At first the Right to Buy probably had little influence on these areas as the initial group of purchasers did not generally buy with a speculative intent but intended to stay in their home for the rest of their lives. However, … this changed in the 1990s as resales began.