Buy policy & Role of Local Authorities

Buy policy & Role of Local Authorities



Buy policy & Role of Local Authorities

Introduction

The Right to Buy (RTB) legislation was introduced in the 1980 Housing Act by Thatcher's Conservative Government elected in 1979. The legal RTB is one of the most significant transformations of the British social housing market. Since it was introduced, over 2.7 million public sector dwellings have been sold to sitting tenants at prices well below market value, transferring wealth from the state to private households (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. A second - and less frequently mentioned - objective of the RTB policy was to stimulate the economy by encouraging the inter-regional mobility of those in the public sector(Balchin 2002).

Tony Durant, MP for the Conservatives said in 1980 “The exercise of this right will bring about greater mobility. One of the fundamental troubles of our economy in this country is that people find it very difficult to move” (Hansard, 1980). Various studies in Europe and the US show that homeowners are less mobile than renters (e.g. Rossi, 1955; Boyle, 1993; Boheim and Taylor, 2002; Helderman et al., 2004; 2006), but these studies often conflate private and public renting.

Discussion

Hughes and McCormick (1981, 1985, 1987) found for the UK that living in public housing, rather than homeownership, is the major tenure-related barrier to inter-regional mobility. Those resident in public housing were more likely to move residence over short distances than those in owneroccupied housing, but much less likely to migrate over long distances and these results were confirmed in a number of later studies (Coleman and Salt, 1992; Boyle, 1995; 1997; 1998; Boyle et al., 1998). This lack of long distance mobility among social renters likely reflects a range of factors. First, social renters may be more likely to work in jobs that are only advertised locally, rather than nationally (Saunders 1985). Second, they have fewer resources to allow a move into private renting or owner occupied housing elsewhere. Third, the administrative controls imposed upon the distribution of public housing make it difficult for tenants to move between local authorities.

Public housing policies were designed to house those most in need of public housing, but they prioritised the needs of those from within their own jurisdictions above the needs of those from other local authority areas. These policies therefore enabled high levels of short distance migration between council houses within their areas, as people's circumstances altered, but tended to restrict (long distance) migration between areas (Boyle, 1995). Thatcher's government was particularly concerned about the lack of job related migration among those in public housing. Neoclassical labour market theory identifies migration as an important instrument for individual career advancement (see Blau & Duncan, 1967; van Ham, 2002; Mulder and van Ham, 2005), and this should have the effect of diminishing regional differences in wages and unemployment (Sjaastad, ...