Southwark Council spends around £2million a year renting out former council housing sold under right to buy as temporary accommodation, a report published on Monday has revealed.
The figures were obtained by London Assembly Member Tom Copley in a report detailing the effect of right to buy – which helps eligible council tenants in England buy their home with a discount of up to £108,000 – on London’s social housing.
However, Southwark’s sum was dwarfed Newham’s approximately £12.5 million spend renting former council homes as temporary accommodation.
At least £22 million is being spent annually across London by councils renting out temporary accommodation from former social homes sold under right to buy.
The amount is likely to be higher as not all councils responded to a Freedom of Information request.
The council said it welcomed the report, which called for the government to abolish right to buy in London.
Stephanie Cryan, cabinet member for housing management and modernisation, said: “It’s a long due report and Tom’s done a great job on it, he really has.”
Explaining the figure, she said: “Although we pay out for it, we do get an income from it via the rental income. And to put it into context, we’re spending £25.5million on temporary accommodation.
“£2.5 million is about 10 per cent of what we’re spending.”
Housing people in temporary accommodation in former social housing on council estate made sense because they have existing support networks, Cllr Cryan told the News, and the council could guarantee the quality of the accommodation.
The cabinet member added: “The other issue is we’re seeing fewer landlords renting to tenants on benefits, so the actual supply [of available temporary accommodation] doesn’t meet the demand.”
This means that in some cases there are fewer options to house people needing temporary accommodation, who are often on universal credit, because private landlords will not rent to them, said Cllr Cryan.
Cllr Hamish McCallum, housing spokesperson for the opposition Liberal Democrats, said the report highlighted “the enormous cost of the housing and homelessness crisis.”
“It is ludicrous that Southwark Council are paying out so much money to rent back former council homes which were sold under right to buy,” he said.
As the News reported in November, the council has mooted options for curtailing right-to-buy in the borough in a bid to preserve social housing stock.
Since 2012 the council has seen more than 1,300 council homes lost under right to buy.
Ideas suggested by Cllr Leo Pollak, cabinet member for social regeneration, great estates and new council homes, included a ‘one in one out’ cap; pushing the government to ensure right to buy cash can be put towards replacement homes; and covenants in new right-to-buy leases requiring any subletting to be at social rents.
However the report noted: “It is not clear however that this would be legal, and may require legislation before local authorities are able to impose such covenants.”
Cllr McCallum said the Liberal Democrats agreed councils should have the ability to end right-to-buy in their local areas but said the covenants proposal “may be unlawful.”
“It is time for national reform of the failed right to buy system to give local councils more powers,” he added.