The sale of council houses has for some time been one of the more contenious issues in the economics of housing in the UK. Of late, the focus of the debate has been on the financial consequences of such sales for local authorities and central government both in the short and long-term. One area of particular current interest is the notion that such sales might help to reduce government expenditure in the short-run, a possibility which hinges on the manner in which the sale are financed. It is this aspect of council house sales which is the concern of the present note. In concentrating on this topic, we exclude, for the most part, the several other, but separable, effects of these sales: both for simplicity and because we have nothing novel to add here to the existing literature. The point that we wich to make is quite basic: Capital market suffer from imperfections and one esults of these is that individuals do not have unrestricted access to preferred tensus (Owner-occupation). The provision of council houses is designed inter alia to help overrcome these imperfections and so the consideration of any reduction is that provision requires explicit examination of concomitant changes in capital markets and their effect on access to suitable accommodation
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