Fresh Tory Right to Buy pledge strikes a jarring note

The Conservative manifesto pledge to extend the Right to Buy at a discount to 1.3m housing association tenants was intended to emulate the popularity of Margaret Thatcher's landmark 1979 policy of selling council houses.

But the reception for David Cameron's 2015 announcement was rather different. Britain is suffering an acute shortage of affordable housing and the prospect of increased sales of limited stocks of cheaper rented homes was not universally welcomed.

The property industry warned that the measure could prompt legal disputes, undermine the financial health of housing associations and lead to a net loss of social housing. The CBI complained that "extending the Right to Buy scheme doesn't solve the problem of boosting the supply of affordable homes."

More than 2m council-owned homes have been sold to their tenants since 1980, many at large discounts before Labour severely restricted the markdowns. Councils only built 345,000 properties in the same period; they received half of the sale proceeds but were obliged to use the money to pay down debt.

That failure to match sales of social housing with new developments is at the heart of criticism of attempts to revive the policy.

"Individual tenants might benefit from the opportunity to own a home, but we would be very concerned that it would result in a dramatic loss of vital social and affordable housing," said Gavin Smart, deputy chief executive of the Chartered Institute of Housing (CiH).

The policy was a political "quick win," said Peter Williams, executive director of the Intermediary Mortgage Lenders Association: "However, it carries no guarantee of greater housebuilding."

Campbell Robb, chief executive of Shelter, the housing charity, said the Tory proposal would be "yet another nail in the coffin" for affordable housing. "We have already seen an outright failure to replace like for like the homes sold under Right to Buy," he said.

The Conservatives promise in their manifesto to deliver 275,000 additional affordable homes by 2020 and to build 200,000 Starter Homes. They plan to fund the replacement of homes sold under the extended Right to Buy by obliging local authorities to sell off the most expensive third of their properties as they fall vacant and replace them with cheaper new-build homes.

But with 1.6m families now on the waiting list for social housing, and the bill spiralling for housing benefit to subsidise those renting privately, Right to Buy is not universally admired.

A YouGov poll yesterday suggested that only 27 per cent of the public thought that extending the policy to housing associations was a good use of taxpayers' money.

The Conservatives calculate that such misgivings will be outweighed by the enthusiasm for the policy from many of the people living in such properties - who stand to gain financially.

In 2011 the coalition promised to extend the discounts available to people living in council houses to as much as £103,900 to encourage more of them to buy the properties.

That has prompted about 33,000 Right to Buy sales in the past three years: matched by the building of only 2,298 homes - in part reflecting a time lag in using the proceeds for new developments.

The Tory manifesto policy involves extending the same discounts - as much as 70 per cent - to those living in more than 1m properties owned by housing associations. At present those residents typically only get discounts of up to £16,000 to buy their home.

Housing associations will require compensation from the government for the discounted sales. This could cost an initial £11.6bn based on an estimate of 221,000 households buying, according to the National Housing Federation.

The Tories say they will raise £4.5bn a year from the forced council sales of more expensive properties, giving them money to divert into compensating housing associations and funding another 400,000 new homes built on brownfield land.

"We fear the figures simply won't stack up," said Mr Smart of the CiH.

The chief executive of one housing association said the idea was "pretty outrageous" given that councils were already under financial pressure: "They haven't even got enough money to pay for care of the elderly," he said. "This is a recipe for absolute mayhem."

Alex Morton, a researcher at Policy Exchange, who went on to work as a housing analyst in Downing Street, first came up with the policy in two papers in 2012 and 2013. The idea was embraced by Paul Kirby, then head of the No 10 policy unit, who wrote last year that it was a way to "end poverty for millions of households overnight - at no cost".

Labour said that forcing councils to sell their most valuable properties and replace them with new-build ones at higher rents could mean a £3.7bn increase in the housing benefit bill.

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