In the midst of a crisis why are we selling off much needed local authority housing?

Rory Hearne: You just have to wonder do we ever learn? In the midst of an unprecedented housing crisis with over 100,000 households in dire need of social housing new legislation is being introduced to allow the sale of local authority housing to tenants at discounts of up to 60%. This is likely to replicate the experience of previous purchase schemes that resulted in the privatisation of 240,000 local authority homes and contributed to the state's inability to deal with the growing need for social housing.


Previous tenant purchase policies since the 1970s have resulted in the sale (or what should be more accurately described as ‘give-away’ privatisation) of over 240,000 local authority units (see Table below). If these were still part of the public housing stock we would not have the housing crisis we have today. This loss of local authority housing through tenant purchase schemes is a direct contribution to the current lack of social housing.

This extension of mortgaged home ownership to lower income households has major potential downsides as we have witnessed dramatically in recent years with the mortgage arrears crisis.

The latest tenant purchase scheme that is being introduced in January by the Minister for Environment, Alan Kelly, will further reduce the stock of social housing available to address the housing crisis. It will also further limit the potential for new innovative solutions that can draw on the existing housing stock as collateral to borrow and invest in additional housing.

Selling public housing at a significant discount is utter madness. It results in a significant loss to the state’s investment in public housing. Almost 25,000 local authority homes were sold to tenants under various purchase schemes from 1995 to 2014 at discounts of up to 30 per cent. The latest scheme doubles that potential discount and, therefore, doubles the losses to the public system through this privatisation scheme.

Sale of LA dwellings under tenant purchase schemes 1990- 2009

Tenants with incomes of under €20,000 per year will get 60 per cent off the market price of the house; those earning up to €30,000 will get 50 per cent off the house price, while there will be a 40 per cent discount for those earning more than €30,000. Local authorities will also be allowed to issue low interest mortgages to tenants to fund the purchase of the houses. Tenants with an income of 15,000 can buy their home. There is a clawback if the house is sold within thirty years.

The tenant purchase policy fits the conservative, right-wing, agenda that promotes the marketization and commodification of public goods. This means converting formerly public or non-market goods, such as housing, health, education into assets that are monetised and ‘financialised’. They become commodities that households and individuals have to take on debt to purchase and provide profits for those providing finance and trading in the assets.

It also has another important element which is why tenant purchase was at the heart of Margaret Thatcher’s neoliberal revolution. That was the idea of extending home-ownership amongst lower income households who, through their status as a mortgaged home ‘owner’, become more ‘responsible’ citizens, more integrated into and reliant upon (and thus supporters of) the capitalist economic system and the political right-wing, anti-state, agenda. The UK Prime Minister, David Cameron, promoted a revised ‘right to buy’ policy as part of the Conservative Party’s election campaign.

In Ireland the policy has also been promoted on the basis of a post-colonial ‘desire’ of people to own their home. Indeed TDs from all political parties in Ireland – both from the Left and the Right of the political spectrum have advocated for this new tenant purchase scheme. According to TD’s, there is strong demand amongst local authority tenants to purchase their home.

Central government and local authorities have also promoted the sale of social housing as beneficial as it reduces maintenance costs of the housing stock and provides the council with income with which to build or purchase new stock. These reasons have again been cited as beneficial elements in the most recent scheme.

But all of this does not get away from the central failings of this policy. The sale of social housing to tenants reduces the potential housing available to address the housing waiting lists, those living in emergency accommodation and substandard accommodation such as Traveller halting sites. It reduces the public stock available to provide a foundation for borrowing and investing in new housing initiatives.

It would seem more logical that if a person is in social housing and their income has increased to such a level as they can afford to purchase a home in the market, that they should pay the full market value of the home or the tenancy should revert back to the local authority/housing association and the person purchase an alternative dwelling.

But part of the reasons for the bubble, boom and housing crash in 2008 was that home ownership was extended to low-income households through mortgages that became unaffordable when their circumstances changed. When interest rates started to rise, or people suffered job loss or wage reduction, they went quickly into arrears. This was at the heart of the sub-prime mortgage crisis. We are still seeing the effects of this in with tens of thousands of households in arrears on their mortgages. We should have learned that home-ownership is not automatically a positive thing and particularly for lower income households.

Unfortunately this tenant purchase policy reasserts that social housing is a not a satisfactory form of housing and that the ultimate goal of households should be to own their own home. But the negative consequences of such a privatised housing market are clear to see as it has been at the heart of failed housing policies for decades in Ireland and the UK. The policy allows for the conversion of current public housing into a financialised commodity – exactly what we need to move away from.

Dr Rory Hearne is a Senior Policy Analyst at TASC. You can follow him on twitter @RoryHearne