Sunday, 01 March 2015

Right to buy to cover 30% of new home costs

The government has set out details of how it intends to ensure a new affordable home is built for every one sold through the revitalised right to buy.

The maximum discount level available has been raised to £75,000, but receipts will only meet 30 per cent of the cost of building a new home.

Councils will be able to retain these receipts if they sign an agreement with the government to use the money to build affordable homes in their area. Any money that is not used locally will be passed to the Homes and Communities Agency and Greater London Authority where it will reinvested in affordable housing.

The 30 per cent level mirrors the funding available through the government’s affordable homes programme, where developers are expected to attract the remainder of the funding through private investment, or putting in their own resources or land.

The government set out its plans for a revitalised right to buy last year. Many of the proposals – including rules on eligibility and discount rates – are unchanged, but the cap on the maximum discount has been raised from the £50,000 that was originally suggested.

Housing minister Grant Shapps said: ‘We’re scrapping the miserly restrictions on the level of discounts under right to buy - great news for thousands of tenants who have done well for themselves and want to buy the home they live in.

‘But we are determined to maintain the number of affordable homes for rent - so for the first time, homes that are sold will be replaced by a new affordable homes, helping councils meet housing need and getting the nation building again.’

Readers' comments (8)

  • Jimmy Cricket

    Given the average grant given out where I work was c.£20k per property on a build cost averaging £100k I'm intruiged as to how this equals 30%

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  • Joe Halewood

    Im sure this thread will fill up with housing finance experts stating how can a new replacement be built from 30% of the funding? An obvious question and an obvious flaw.

    But let's leave that aside and imagine Grant Shapps is correct and 170,000 new properties for 'affordable rent' get built.

    The 170,000 now social homes receive on average £76.48 per week in HB.

    The replacement AR homes will receive HB at 80% of market rent which is (again at a national average) £134.68 per week - an increase of £58.20 per week or £516m per year.

    So even if this hastily cobbled together and bizarre funding arrangement does produce a 1 for 1 replacement then it will cost us all a bucketload more in taxes to pay for the massively increased HB cost!

    If there is 370,000 AR homes as Shapps and Cameron wish then that rises to an additional £1.91 billion per year to the HB bill.

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  • Code 3 I believe is costing about £110k for each house. It's even better news for the Conservatives, hopefully will allow them to sell off more social housing and replace it with 'affordable' market rents.

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  • Chris

    There we go then 141 in Toryspeak = 341

    That should reduce housing availability to those on low incomes whilst increasing the take up of unaffordable private lets. The poor are being forced back into the tennements, back to where they were before the war. We will be queuing up for work by the day next (except some of us already are thanks to that nice Mr Blair's failure to reverse the last attacks on the working classes).

    Now - does the elite remember why they allowed decent housing and social security in the first place? Perhaps they should take a little look back to realise their error in thinking that the fall of the Soviet Union means that the working class can be treated like cattle again. The 'Red Dred' was never the risk to British Society, it was always the potential rise of the dispossessed.

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  • In the uk , house prices have gone up around 300% in the past
    15 years meaning this whole subject is unaffordable to most
    people living in council housing.
    The tories said before the election that they would offer a grant
    to council tenants for them to give up their tenancy,and to use
    these funds directly to buy their own home , thereby releasing
    a useful empty home to assist those on the waiting lists.
    This scheme was to be called a foot on the ladder, but what has
    happened to it now,has it been dropped?

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  • Nicole M

    Change the record, James.

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  • Whilst I agree that the sums don't add up for funding new affordable homes and I don't agree with the whole affordable rents business at all I'm afraid I just don't understand Joe's logic. The tenants in the RTB homes aren't claiming HB so there is no change there. The tenants in new affordable homes will be claiming HB but they would already be claiming HB wherever they lived before so there is no huge increase. In fact if they were housed in the private sector the HB bill will actually go down.

    Please lets have arguments that stack up and make sense.

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  • The "Tenants n the RTB homes are'nt claiming HB" says Both sides of the fence. But being on HB does not stop a tenant applying for the RTB not unless the legislation is changed. What hopefully will happen is that the mortgage lenders will be more responsible than they previously were and refuse to lend to people with no other income other than state benefit. Of course the money laundering ie my family are lending me the money explanation of suddenly being financially able to purchase the home will continue. And of course those that are purchased will not be family homes but private landlord cash cows with their tenants on HB

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