Will Highland Council scheme to buy private houses work?

Highland Council is taking radical action to address a chronic shortage of family-sized social housing.

Last month, the local authority announced that it’s looking to buy private homes. Home owners don’t need to get a home report, or advertise their house for sale.

As housing committee chairman Laurie Fraser puts it: “It can be one visit, and if the price is right, you could sell it there and then.”

So what’s the catch? The most obvious one is sellers might not get the best price for their home.

Estate agents told the Press & Journal that properties are “flying” right now.

A spokeswoman for Highland Solicitors Property Centre (HSPC) said she couldn’t think of any homes that had been languishing on the market for months.

Houses are flying

Yvonne Fitzgerald, an estate agent with experience across Highland, said homes are selling well beyond the asking price.

“The market is very buoyant,” says Ms Fitzgerald. “It’s a totally different market than two years ago. Family homes in particular are flying. At my estate agency in Caithness, properties that previously took up to a year to sell are going within a couple of months.”

Ms Fitzgerald acknowledges that there are local variations. For instance, some parts of Highland have strong demand for holiday homes. In Caithness, the trend is more towards people from urban areas of south England looking to move up permanently. Inverness, she says, is busy all year round.

“People will generally get more money on the open market,” says Ms Fitzgerald. “Most properties are selling for more than their home report value, and we’ve seen nice family homes going for as much as £30,000 over the asking price.

“Sites like Right Move get 127 million hits a month. In that climate, selling a house privately is stupid.”

The £5k council house

Of course, any estate agent worth their salt will say that. However, the council doesn’t disagree.

“People might get more money on the open market, but this option is for people who want a quick and hassle-free sale,” says Councillor Fraser. “Because you don’t need a home report or to market your property for sale, you can save substantial funds.”

Ironically, both Councillor Fraser and Ms Fitzgerald agree that the biggest uptake is likely to come from ex-council homes. “This will be more the case of the council buying back its own ex-local authority houses,” said Ms Fitzgerald.

It’s well known that Margaret Thatcher’s Right to Buy scheme in the 80s removed a lot of social housing from council hands. At the time, council tenants were able to buy their rentals at enormous discount.

Councillor Fraser can remember seeing the prices in council papers 10 or 15 years ago. “We had houses worth £100,000 that we were selling for £5,000 because there were so many discounts applied,” he says.

“I remember one house that a family bought for £40,000. They then sold it for £110,000, went on a round-the-world cruise with the profits, and came straight back onto the list for a council house to rent. A lot of that went on.”

Huge waiting list for council homes

So where did that leave councils? In most cases, scrambling to keep up with rising demand and insufficient stock. In Highland, there are 9,600 people on the waiting list for a council house.

“I’ve been pushing this for years,” says Councillor Fraser, who has served as a councillor for three decades. “The council has been slowly buying up properties for the past five years or so. Now there’s an opportunity to buy more, and we’re actively promoting it.”

Unfortunately, estate agents and economists think the plan will have limited success.

“It is a very interesting initiative, which in principle is very welcome,” says Highland economist Tony Mackay. “There are serious housing problems for low income families in many parts of the Highlands and Islands, which have worsened in the last two years because of a big fall in new housebuilding.

“Highland Council have two main options for their policy: build more houses or buy existing ones. From the economic perspective, the former is much better in my opinion because it adds to the existing housing stock.”

Stop-gap solution?

The council does intend to build new homes, too. In fact, it has committed to building 500 a year in 2021-2026, of which 70% will be affordable rent and 30% low-cost home ownership or mid market rent.

Councillor Fraser says that buying back is quicker than building new. However, it comes at a high cost. “As a corporate buyer, the council can take out a mortgage over a 60 year period, whereas private buyers will only get maybe 25 years,” he says.

“However, when you look at the Highland Council budget, we have over a billion pounds of debt running to 2085.”

Mr Mackay cautions that the open market buying scheme will only work as a “short term measure” until new homes are completed. Mr Fraser accepts that it’s an addition to the capital building plan, but sees an opportunity to make a difference now:

“The fact is, we are getting a house back and getting another family re-homed and off the waiting list.”

Would you consider selling your house to the Highland Council?

Do you have a home that you’re hoping to sell quick and hassle-free? Are you a growing family in need of a bigger council house? If so, we’d love to hear from you. Drop us a line.

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