Margaret Thatcher’s right-to-buy scheme has cost UK taxpayers almost £200bn, according to a report into the policy’s contribution to Britain’s housing crisis.
In its report into the sale of millions of council homes to their tenants at steep discounts since 1980, the Common Wealth thinktank said the policy had fuelled vast shortages in social housing and turbocharged inequality.
Describing it as one of the “largest giveaways in UK history”, it said the sale of 1.9m council homes in England had contributed to a situation where one in six private tenants in England now rents a former local authority home.
Local authority tenants have been able to buy their homes since 1936, but changes made under the first Thatcher government in 1980 triggered a boom in sales at steep discounts to market value.
Calculating the “opportunity cost” of the sales, Common Wealth said the former council homes were now worth an estimated £430bn after taking account of inflation and the surge in property prices since 1980.
Of this sum, the thinktank said £194bn represented the value that was effectively given away when the homes were sold at a discount. Between the years 1980-81 and 2023-24, the discount averaged 43% on the prevailing market price.
The report comes as Angela Rayner, the deputy prime minister, pushes to tackle Britain’s housing crisis by making sweeping changes to right to buy, including making it harder for tenants in England to buy their council home.
Under the planned changes, eligibility for the scheme will be tightened. This will include extending the minimum time a council tenant must live in their home from three to 10 years before they can buy it at a discount.
Right to buy was launched by Thatcher as a pitch to older working-class voters to build a “property-owning democracy”. Although it helped millions of families into home ownership, it also dramatically depleted Britain’s affordable housing stock as the homes were not replaced.
Margaret Thatcher in September 1979 with the new owner of the 1,000th sold-off London council home. Photograph: Keystone Press/Alamy
After rising for decades, home ownership rates have fallen since 2004, and have collapsed among young adults. From a peak of more than half of 25- to 34-year-olds owning their own home in 1990, less than a quarter of young adults are now property owners,leading to a boom in private renting and many choosing to live with parents.
After decades of sharply rising property prices, Common Wealth said, local authorities have lost the use of housing assets that could have either been sold at higher market values or used for social housing.
Chris Hayes, the thinktank’s chief economist, said: “The severe financial straits facing councils should be seen in the context of a decades-long assault on local government, in which right to buy was a central pillar, denying councils discretion over how best to use assets that they had built.
“Now those assets are in dire shortage and councils still bear the heightened cost of seeing people through the housing crisis.”
Many of the properties are now rented out, often to tenants on housing benefit at a cost to local authorities of more than £20bn year, while councils have lacked funding to replace the homes sold.
The leftwing thinktank, which has links to senior Labour cabinet figures, said local government has been in “net disinvestment” in every year but one since 1988-89 – meaning it sells more assets than it builds. A report earlier this year by the Centre for Cities found that returning the number of affordable homes back to 2010 levels would cost the government £50bn.
Labour has pledged a “social rent revolution”, allocating £39bn of social and affordable homes over the next 10 years, alongside slashing planning rules to support private sector housebuilding. However, critics have warned that the government could struggle to hit its target to build 1.5m new homes in total.
Kwajo Tweneboa, a social housing campaigner, said right to buy had “gutted council housing and transferred public wealth into private hands”.
“We’re in a housing emergency. Millions stuck on waiting lists. Tens of thousands living in temporary accommodation that’s unfit and unsafe. All while homes that were once publicly owned are now profit-generating assets for private landlords,” he said.