Revealed: Council sells homes for £10m under Right to Buy – then spends £33m buying them back

Newham Council, which runs the east London borough with England’s biggest social housing waiting list, sold off 130 properties for £10.6 million, only to buy them back for £33.3m – losing £22m on homes it had owned just a few years previously, Big Issue can reveal.

It is the latest example of the millions lost by councils to private hands as they battle to reverse Right to Buy, discovered by Big Issue in our ongoing investigation into Yo-yo Homes. A loophole in the system means if homes are sold back to councils more than five years after the Right to Buy sale, the local authorities are powerless to reclaim discounts.

In one example, Newham Council sold a property under Right to Buy in June 2015 for £49,300. Right to Buy rules mean the council was forced to sell it. Just under six years later, in March 2021, they bought that same home back for £320,000, more than six times what they sold it for.

Somewhere between West Ham and Plaistow, in the E13 0 postcode, somebody made £270,000 on this property. Because they sold it back to Newham Council more than five years after buying it, they did not have to pay back any of the discount – it was all profit.

This situation has happened 130 times in Newham in the past five years. In total, the council has lost £22.7m buying back properties it owned between five and 10 years previously. We’re calling them Yo-yo Homes.

These losses are happening in the place where the country’s housing crisis is at its most extreme. More people are waiting for social housing in Newham than anywhere else, and the council is flogging off assets to try and fill an £84m black hole mostly driven by the cost of homelessness. Some 50 households are forced into temporary accommodation every month.

Newham Council said the properties, most of which were flats in blocks it owns the freehold to, were cheaper than buying on the open market or building new homes, and represented a quick way to provide housing.

“People will be astonished to find out that their money is being spent in this way in Newham, with such a massive waiting list, so many people homeless and living in temporary accommodation. It’s not good,” Green councillor Areeq Chowdhury told Big Issue.

“If you think about £22m, that’s money in an ideal world which could be used on housing the homeless, but instead it’s used to create wealth.

“A choice has been made to buy back these properties at a loss, rather than fund these other public services that the council decided to cut.”

Residents have seen their council tax increase by 8.99% in the space of a year, while those renting from the council can claim to be living with the country’s worst social landlord after a damning report from the Regulator of Social Housing.

At the same time, Big Issue can reveal the scale of profits being made by those who bought homes at a discount then found themselves a willing buyer in a council. Former tenants are walking away with over £200,000 more than they paid for their properties – cash which comes from the taxpayer.

Examples include a property in Plaistow, sold by the council in June 2015 for £77,300, then re-purchased in March 2022 for £340,000 – a loss of £262,700. Or a home between East Ham and Beckton, sold in December 2014 for £47,300 and repurchased in October 2020 for £295,000. On that property, the council lost £247,000.

Big Issue has been exposing Yo-yo Homes across the country – properties sold on the cheap under Right to Buy, then repurchased at losses to the taxpayer. Labour says it will fix the loophole allowing these profits by extending the time discounts can be clawed back from five to 10 years, in line with the period during which councils have a right of first refusal, but has not put a timescale on.

Newham stands head and shoulders above other councils – with the £22.7m of losses the greatest uncovered by Big Issue so far for a single area. It is a similar sum to the £24.4million recently awarded to the borough to tackle homelessness.

Read more of our investigation into Yo-yo Homes:

• The ‘Yo-yo Homes’, revealed: How ex-council tenants make over £200k selling homes back to councils
• The Yo-yo Home files: These are the Right to Buy properties councils have lost millions on buying back
• ‘Urgent’ action needed on Right to Buy reforms after Yo-yo Homes ‘scandal’, Labour figures say

Councils across the country told us Yo-yo Homes had been re-purchased to get social housing stock, temporary accommodation, or housing for refugees. Faced with the alternative of paying out to private landlords, councils are essentially battling to reverse Right to Buy. But that process has created winners.

Town halls have no choice but to sell homes under Right to Buy. Rokhsana Fiaz, Newham’s Labour mayor, promised to campaign for an end to Right to Buy in her bid for the office, and to “rigourously scrutinise all right to buy applications”. London mayor Sadiq Khan wants councils to have the choice to end the policy and stop selling homes.

“It’s just tragic, isn’t it? Right to Buy is already a key driver of the housing crisis,” said Jess Redmond, a renter in Newham and a member of the London Renters Union. “It feels very unfair. It feels farcical, Kafkaesque.

“A lot of renters are having to live these very precarious lives while someone else is clearly getting this big lift.”

Redmond added: “I’ve met members who’ve been stuck in hotel rooms with multiple family members for months on end.

“Just look at the cherry on top, the Right to Buy policy allows this continued extraction from the housing system to profit private owners of housing, and the people who are already asset rich. You can’t make it up. It’s horrifying.”

While these profits are being made, residents struggle with housing.

Newham received the first ever C4 grading from the Regulator of Social Housing in October 2024. The regulator found “very serious failings” and concluded “fundamental changes are needed”. These included 20% of homes not meeting the Decent Homes Standard, and 40% of properties not having an electrical condition test for more than 11 years.

Chowdhury said housing was by far the most common issue locals came to him for help with. 

“It could be maybe a family with four children, and dad’s sleeping on a sofa or something, so the kids can have a room. They may have been in that situation for 10 years plus, waiting for a suitable property to come up for them,” he said.

“Often it’s dump and mould, people living in properties that are literally killing them, shortening their lives, giving them health problems.”

These “hellish, hellish” conditions, Chowdhury said, “knock on to life chances and opportunities for those people”.

The Green councillor said he had met one resident with a stoma bag who lived in a property where the front door was regularly left open, and people taking drugs. “They felt afraid to change their stoma bag until the early hours of the morning, when they felt safe enough to leave their room,” he said. “This is not a dignified society for the people living in those conditions.”

Caroline Verdant, a community organiser with Newham Citizens, told Big Issue: “I am completely flummoxed, because Newham cannot afford to lose money.”

Verdant, whose work with the local branch of Citizens UK involves collaborating with schools, charities, colleges, universities, mosques and churches in the area to identify the biggest issues affecting them, said one problem dominated: “The work I’m doing is all around temporary accommodation”. 

Verdant added: “There is a housing crisis in Newham where you have got people on the council waiting list that have been on there for over 20 years, families who have not had secure housing their entire lives.”

Newham is facing an £84m budget black hole in 2025/26, of which £52m is down to temporary accommodation and homelessness. To fill the gap, the council is selling assets, and wants to raise £51.2m this year. The borough’s chiefs believe they need to find an additional £100m over three years to meet the demand for temporary accommodation.

The borough recently blew the lid on a case of “serious internal housing fraud” after a staff member allegedly gave 35 council properties to residents ineligible for the homes. The case was uncovered thanks to a whistleblower, and the staff member “immediately resigned” after they were confronted. Newham is now working to get the homes back.

Chowdhury, a member of Newham Council’s audit committee, said the decisions to purchase the Yo-yo Homes needed further scrutiny, and that he did not believe the proper questions had been asked.

“This is another challenge that should be scrutinised properly. What was the trade off made before these decisions? Were they the correct trade-offs?”

“I think there’s a massive problem in general around scrutiny and governance and process in the council,” he said. “Is anyone looking at this in the aggregate? Do people understand that 22 million pounds is being spent?

“If they’re not asking it about the really, really terrible stuff, are they asking questions about more basic stuff? I wouldn’t have confidence that they are.”

A Newham Council spokesperson said: “Most of the former council properties we’ve bought back are flats in council-owned blocks. These were sold under Right to Buy, which by law required us to sell to the tenants at large discounts.

“To repurchase, we must pay current market value – often much higher due to discounts and property inflation.

“Buybacks make sense for councils for several reasons:

• They’re in council blocks, helping us consolidate management.
• They provide a quick way to deliver much-needed homes.
• They’re far cheaper than buying on the open market or building new homes.

“The government has responded to concerns about Right to Buy and the shortage of social housing nationwide. Discounts are now less generous, and councils have greater flexibility in using funds to provide homes.

“Alongside buybacks, we also have ongoing programmes for delivery of new build homes and regeneration.”

A spokesperson for the Ministry of Housing, Communities and Local Government previously told Big Issue: “There are simply not enough social homes because of the housing crisis we inherited, and we are giving councils greater flexibility to use Right to Buy receipts so they can build and buy more homes.

“Our priority is to reform the scheme to better protect social housing stock and support councils to deliver new homes.

“We will continue to support long-term tenants to buy their homes, alongside building the biggest boost to social and affordable housing in a generation – backed by £39 billion investment.”

Do you know more about this story? Email Big Issue reporter greg.barradale@bigissue.com

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