The Government’s Right to Buy policy could be costing Lewisham council £58 million a year. Pic: Nigel Mykura

The Government’s extension of the Right to Buy scheme to include housing association tenants is set to cost east London councils an average of £45 million each, according to the homelessness charity Shelter.

As part of the Housing and Planning Bill, which is expected to cost £4.5 billion nationwide, local authorities will be required to compensate housing associations for discounts of up to £100,000 that they will be legally obliged to offer to their tenants. In turn, this could result in a mass sell-off of local authority properties.

Campbell Robb, Shelter’s chief executive, said: “With millions of families struggling to find a home they can afford, forcing councils to sell-off huge swathes of the few genuinely affordable homes they have left is reckless.

“The government is out of touch on this issue, and running out of time to help the millions of ordinary people in London crying out for a home that they can actually afford.”

However, a spokesperson from the Department for Communities and Local Government (DCLG) told ELL it disagrees with Shelter: “These figures are misleading,” the spokesperson said. “The truth is there are billions of pounds locked up in local authority housing assets so it’s only right that when higher value homes become vacant they are sold to build new homes that better meet local needs. It means every home sold will be replaced with at least one new affordable home and two for one in London.”

Shelter’s research puts Hackney fifth and Lewisham 11th in the top 15 London boroughs hardest-hit by the extension of the scheme, with Southwark topping the list at a cost of £122 million per year.

Ray Woolford, a representative for the campaign group Lewisham People Before Profit, said: “The present Government’s housing bill and policy is totally based on Conservative ideology and has nothing to do with dealing with the real housing crises facing huge numbers of low paid workers in the UK and the spiralling £29 billion a year Housing Benefit bill, paid for out of the hard earned taxes of all UK workers.

“It costs £30,000 to build a council home and £44,000 to keep one family in bed and breakfast a year. So clearly by building council homes, councils could reduce the housing benefit bill and in three years would have recovered the cost of the build and would have rents without mortgages to pay to invest in front line services and staff rather than the present busted ideology of austerity which is transferring more and more money to landlords.

“Recent amendments to the Housing Bill have given the Communities Minister the power to tell each local council what proportion of its vacant stock is considered high value and thus, what proportion should be sold off. The original threshold would have resulted in a shortfall, but the amendment will mean as many council homes as necessary can be defined as ‘higher value’ in order to raise the £4.5 billion needed.”

Becky Smith, a teaching assistant, who has been on their local housing register since 2004 said: “We’ve been on a housing waiting list for twelve years, and are no closer to a stable home. If our tenancy ends, we’ll really struggle to afford somewhere else to rent. We could be homeless.

“The government says it’s for hard-working people. My husband and I both work hard, but we could never begin to afford our own place. If they’re selling off the last council homes, and making the chance of getting a stable home even more remote, how are they possibly helping us?”