The Scottish Government

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Chapter 1: Introduction and Background

Introduction

This report sets out the findings of research to explore views and experiences of Right to Buy. The research included tenants who had purchased their property under the Right to Buy, purchasers of ex-Right to Buy properties ('resale purchasers') and tenants who had not exercised their Right to Buy.

The Scottish Executive regularly collects statistics from local authorities about applications to buy and sales under the Right to Buy and there has been a range of quantitative research looking at issues such as condition and resales of Right to Buy properties. However, the Scottish Executive was keen to understand more about individuals' views and experiences of Right to Buy. It recognised that there was limited existing research which explored in depth the views and experiences of those affected by the Right to Buy. Most research carried out was quantitative in nature and unable to explore in detail motivations, experiences and aspirations. The intention was that this research would go some way to filling this gap.

The research findings will contribute to evidence to inform a report for the Scottish Parliament on the Right to Buy.

Background

The Right to Buy was introduced in 1980 to give those living in local authority rental accommodation the right to buy their house or flat at a discounted rate and thereby become 'home owners'. Prior to that time, the sale of council houses was at the individual authority's discretion, and so varied from place to place. Since the introduction of the Right to Buy, some 400,000 properties have been sold to sitting tenants in Scotland - around 40% of the 1980 local authority stock.

The Housing (Scotland) Act 2001 introduced the modernised Right to Buy for all new tenancies from September 2002. The modernised Right to Buy sought to strike a balance between still allowing tenants to purchase their homes at a discount - and so achieve aspirations of home ownership - and the needs of landlords to maintain a level of stock that met existing and potential tenants' needs. The modernised Right to Buy therefore extends the length of time before a tenant can apply to buy their home from two to five years and, critically, both reduces the maximum percentage discount and sets a ceiling on the amount of discount that will be permitted.

The Act places a requirement on the Scottish Executive to report to Parliament on the effect of changes to the Right to Buy within four years of the Act coming into force. This covers: the extent to which tenants have exercised their right to buy and the effect of this on the nature and condition of the stock; and the need, demand and availability of housing.

There is already a considerable body of evidence about the Right to Buy. At the national level, the Scottish Executive collects (and publishes) information on the number of sales from local authorities, Scottish Homes ¹ and RSLs in Housing Trends on a quarterly basis; while the Scottish House Condition Survey provides information on the condition of the Right to Buy stock and a profile of the people who live in it. However, there is very little information about why people buy under the Right to Buy, their experiences of the process and their future aspirations. It is therefore anticipated that this research report can make a valuable contribution to the evidence that informs the Ministers' report.

Overview

The Right to Buy was introduced in 1980 by the Conservative government. Since its introduction concerns have been expressed around the potential impact on local authorities' capacity to continue to meet housing need (a concern that has been reinvigorated since the introduction of the Homelessness etc. (Scotland) Act 2003 ²) - and in particular that the Right to Buy resulted in insufficient supply of key types and/or sizes of stock, and of stock in particularly pressured areas. Concerns have also been expressed about the impact of the Right to Buy on the quality of housing stock - both in terms of ability of tenants who purchase to be able to afford the full costs of owner occupation, and in terms of local authorities' ability to manage mixed tenure estates.

At least initially, strong statements about the potential impact of Right to Buy were made with little or no supporting evidence (Scottish Executive, 2000). However, the growing body of quantitative evidence regarding the impact of Right to Buy is considerable. It is now clear that the impacts of Right to Buy are more complex and variable than many of the contributors to the early debates had allowed. Much of the argument had focused only on the initial impact of Right to Buy, whether at the national, local or individual level. However, over the 25 years that it has been in operation, Right to Buy can be seen to have had extensive fundamental and long term impacts, not least, on the tenure structure of Scotland. Owner occupation has risen from 36% of households in Scotland in 1981 to 63% in 2001. Just under half of this growth in home ownership is attributable to Right to Buy sales (Scottish Executive, 2000). Right to Buy can therefore only be properly assessed in an appropriate time frame, one in which "effects…take decades to unfold" (Scottish Executive, 2000).

The paper Evolving the Right to Buy: Evidence for Scotland proposes some key questions regarding the impact of Right to Buy and then seeks to answer these questions using quantitative data, such as the findings from the Scottish House Conditions Survey (Scottish Executive, 2000).

Of particular relevance to this research study - both in terms research questions and sample design - are the following questions:

Who wants the Right to Buy?

The report describes how Scottish Household Condition Survey 1996 data was used to demonstrate that over half of the heads of households living in social rented accommodation aspired to be home owners. This was true across all age groups (54% of those aged 16-24 aspired to be home owners, 64% of those aged 25-39 and 58% of those aged 40-59; average 60%). Clearly, this implies that, on average, around 40% of those in social rented accommodation did not aspire to own their own home.

Those aged over 40 were most likely to say they would buy their current house under Right to Buy if their circumstances changed. Younger tenants, (e.g. those aged 25-39) were more likely to want to leave their current social accommodation to move into their own, private home. This is illustrated by the table below.

Table 1.1 Home Ownership Aspirations by Age of Head of Household. Social Rented Stock with Head of Household <60

These findings suggest that there may be distinct 'types' of tenants eligible for Right to Buy, with different aspirations, expectations and perceived opportunities. Many respondents aspire to own their own home, yet over a third do not. Younger respondents have responded differently from older respondents regarding their likelihood of exercising their Right to Buy. What makes for this difference between age groups?

Chapter three explores in depth who has bought under the Right to Buy, and why different types of people do so.

Who actually exercises the Right to Buy?

Some local research evidence suggests that social housing tenants in certain rural areas may, at certain periods, be more likely to exercise the Right to Buy (e.g. uptake of Right to Buy in Badenoch and Strathspey 49%, North East Fife 43%, Orkney Isle 40%, compared to the Scotland average of 39%, 1980-1995). However, national findings show little variation between Right to Buy uptake rates according to the designation of areas as rural or urban (34% v 36% respectively) (Scottish Executive, 2000).

Local research findings from England also suggest that social housing tenants may be less likely to exercise the Right to Buy in areas of social and economic deprivation (work done in England by Forrest and Murie 1988).

There is a considerable body of evidence regarding the type of social housing tenant who is most likely to exercise their Right to Buy. This evidence has remained fairly consistent over time and by geographical locality. Williams et al, writing in 1988, noted that the tenant most likely to exercise their Right to Buy is middle-aged, without dependant children, with a non-manual or skilled manual occupation and living in a house rather than a flat. Those most unlikely to buy are older or younger tenants, those without employment, single parent families and those living in flats. These findings have been confirmed by Jones and Murie (1999).

However, the impact of the Right to Buy scheme over the years has lead to a change in the properties available to rent, the profile of people in social rented accommodation and, therefore, the profile of people with the Right to Buy. It has been speculatively suggested that a higher proportion of young people, who have lived in social accommodation for a relatively short period of time, may now be buying social accommodation through Right to Buy.

Chapter three explores the motivations of different types of households, considers in detail the factors that people take into account when considering whether or not to buy their home, and explores how these differ between different types of area and different parts of the country. We will see that location is absolutely crucial - people want to buy a property in an area they feel safe in, and in which they have established social networks.

Is there evidence of wider community effects of Right to Buy?

The effects of Right to Buy are, in reality, integrated within all the other fluctuating dynamics of society and culture. For instance, the local housing systems within which Right to Buy operates change over time in terms of their parameters, scale, aims and objectives, resources, and operations. They also vary according to local authority. A combination of social, cultural, economic and political factors have contributed to the trend for home ownership, in which Right to Buy plays a part. Overall, it could be argued that Scottish society has become more affluent since the inception of Right to Buy with higher employment and a greater percentage of the population in professional, full-time work. At the same time, mortgages have become more accessible, and mortgage-providers are more willing to offer larger loans to prospective home buyers. House prices generally have risen dramatically. In terms of cultural dynamics, the population's attitudes and expectations regarding home ownership have shifted markedly since 1980 (Chapman Hendy, 1997 and Scottish Homes, 1997). At the level of the individual household, the Evolving the Right to Buy report points out, "it is a myriad of individual household decisions which are reflected in the overall and area take-up rates" of Right to Buy (Scottish Executive, 2000).

Once a social property has been bought through Right to Buy, there may still be continuing impact. Bramley et al's report The Future of Owner Occupation in Scotland, Communities Scotland 2001, proposes indicators for housing areas at risk of low demand. Their study found that the areas which scored most highly on this index were peripheral estates where the owner occupied housing consists largely of houses first bought under the Right to Buy. In traditional social housing estates, like Easterhouse in Glasgow, Right to Buy owners may have difficulty reselling their properties. They may find that resale prices are much lower than expected and potential buyers difficult to find. These properties tend to be resold not to owner occupiers but end up at the lower end of the private rental market, either via sale to landlords or by being rented out by the current owner (Communities Scotland, 2005).

The report Low Demand for Owner Occupation in Scotland by Communities Scotland (2005) claims that the resale of Right to Buy properties (and new build properties) in the second hand market will serve to increase the overall number of house sale interactions, alter the profile of local housing stock and have an effect on property prices.

Clearly this research report cannot quantify national implications of the Right to Buy. However, it does explore the implications of the scheme at the individual level: in chapter five we examine the impact of the scheme on people's lives, and in particular how the owners are faring in the owner occupied sector. Participants were also keen to discuss the impact of the scheme on the quality of housing locally and the availability of rented housing in the neighbourhood.

Structure of the report

This remainder of this report is structured as follows:

• Chapter two describes the aim, objectives and methodology of the research
• Chapter three explains people's motivations for exercising or not exercising the Right to Buy
• Chapter four describes purchasers' experiences of the process of purchasing under the Right to Buy
• Chapter five discusses the impact of the Right to Buy
• Chapter six contains a summary of the findings
• Chapter seven contains a discussion of the key issues arising from the research

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