Sunday, 23 November 2014

Cameron launches reinvigorated right to buy

The prime minister has formally unveiled the new right to buy scheme for social housing tenants in England which will include an increased discount cap of £75,000.

The government is pledging that all homes sold under the reinvigorated right to buy will be replaced by a new home for affordable rent, with receipts from sales used towards the cost of the replacement.

Councils will only be able to keep additional receipts from sales if they sign up to an agreement with government that they will limit the use of those receipts to 30 per cent of the cost of the replacement homes. They will be expected to secure the remainder of the funding from other sources. If they do not wish to do so then the right to buy receipts will be placed in a central pot to support house building nationally.

Right to buy was launched in 1980 with discount rates set at between 35 and 50 per cent, and capped at £25,000. This was increased to £50,000 in 1989, but has been cut in recent years following the introduction of regional limits, leading to a decline in the popularity of the scheme.

‘Additional properties that are sold will be replaced by new affordable homes, using the same highly successful model that is already delivering thousands of new affordable homes in every part of the country.’

Housing minister Grant Shapps

David Cameron said the discounts became ‘virtually meaningless’ in recent times and that he wants to see a new wave of homeownership in Britain.

At a launch in London, Mr Cameron said: ‘I want many more people to achieve the dream of homeownership. In the 1980s, right to buy helped millions of people living in council housing achieve their aspiration of owning their own home.

‘It gave something back to families who worked hard, paid their rent and played by the rules. It allowed them to do up their home, change their front door, improve their garden – without getting permission from the council.

‘It gave people a sense of pride and ownership not just in their home, but in their street and neighbourhood, helping to build strong families and stable mixed communities.’

Under the new right to buy, local authorities will be able to cover some of the cost of withdrawn applications. In London, councils can retain £2,850 while those in the rest of the country can retain £1,300 to cover the costs of administration on each sale.

Around two million homes have been bought under the right to buy since the policy was introduced in the 1980s. The impact assessment for the reinvigorated right to buy, published in December last year, suggested around 300,000 households might be in a position to take advantage of the new discounts.

The government said today around 2.5 million tenants would be eligible for the reinvigorated right to buy, including half a million housing association tenants who have a preserved right to buy as a result of stock transfer from a local authority.

Housing minister Grant Shapps said: ‘Councils must ensure that their tenants are kept properly informed of the new opportunities, and offer a helping hand to those tenants who want to buy their property.’

The new right to buy rules

  • Tenants must have been public sector tenants for five years before they can qualify for the right to buy, although not necessarily in the home they are currently living in.
  • For houses, tenants can get a discount of 35 per cent after five years, with an extra 1 per cent per year up to a maximum of 60 per cent, or the £75,000 cap.
  • For flats, tenants get a discount of 50 per cent after five years, increasing by 2 per cent a year to a maximum of 70 per cent, or the cap.
  • The discounts available compare favourably with those previously available, which ranged from £16,000 in London up to £38,000 in parts of the south east.

Readers' comments (51)

  • "Affordable rent".......affordable for who?

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  • They will be expected to secure the remainder of the funding from other sources. If they do not wish to do so then the right to buy receipts will be placed in a central pot to support house building nationally.

    For social housing naturally, no?

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  • Gavin Rider

    Rather amusingly David Cameron says "It gave something back to families who worked hard, paid their rent and played by the rules. It allowed them to do up their home, change their front door, improve their garden – without getting permission from the council."

    My mother's next door neighbour was a Council tenant but that did not stop him putting up a huge lean-to structure in the back garden, cladding it in corrugated PVC sheeting then using it as an extended kitchen, complete with electrical appliances.

    He knocked hell out of the interior, completely remodelling the kitchen and demolishing walls (he was forever using a hammer drill) - none of it with the permission of the landlord and without having to pay to buy the place either!!!

    ...best of both worlds as far as he was concerned!

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  • Alex Brown

    From the governments own cosultation document it is not possible to raise 30% of cost of new build by councils, sell 10 get nothing, sell 16 make £92,000. There is an acute shortage of social homes now, selling of more will be an unmitigated disaster.

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  • Ilimis Mouloud

    Yes affordable to who. You look around and see the high Rent and Service Charges with a high deposit

    Pay people a wage - a living wage

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  • Gavin Rider

    Nathalie - I believe any "centralised" RTB money will still be used towards Affordable Rented housing much as it previously was pooled.

    Any affordable housing that receives subsidy from the taxpayer has to be let at Affordable Rent. If it is built without public subsidy it can still be social rented housing. Social rent is not being replaced, it is being supplemented with this "intermediate rent" product rather like intermediate Affordable Housing allows part-ownership.

    At least, that is how I interpret these changes.

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  • Gavin Rider

    Alex - you are right.

    I have been a long-standing supporter of RTB from the tenant's perspective and I believe that it has many advantages, not only for the tenant who buys at a discount. I won't reiterate them all again for fear of being criticised over the length of my posts.

    I don't believe the problems of removing long-standing tenants and their properties from the social housing pool has anything like the serious consequences for social housing availability that most of RTB's critics say. The problem with availability is due to a lack of new supply, not what is done with the existing stock.

    But in that specific instance I do agree with you that the government has been entirely duplicitous in its public announcements by giving the impression that homes sold through RTB would be replaced one-for-one. The actual policy intention is nothing like that.

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  • Ilimis Mouloud

    Is not also Housing Association paid by the public purse. Why our not Housing Association Tenant given the same opportunity

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  • the term affordable housing is complete misnomer, it is not affordable to tenant on low pay. I am an H A tenant and secure tenant. The flat upstairs is rented out at market rate, she is paying £250 per week. If I had to pay 80% of that, I would be evicted as there is no way I could afford that, but would not qualify for HB

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  • Joe Halewood

    JeanH - the affordable (sic) rent product qualifies for 100% of HB. So to use your example the 1 bed flat let at 80% of the £250 per week would receive £200pw in HB.

    The national average sees just 65% of rent level paid out in LHA by comparison.

    So a private tenant in a 1 bed £250pw rented property receives £162.50 in LHA whereas if it was an affordable rent let a social tenant would receive £200pw in HB. This means the social tenant in AR receives 23% MORE in HB than a private tenant would and this is why HB bill will rocket

    I note Grant Shapps has set up a government facebook page for RTB and no that is not a two days too late April Fool it is fact!! As he tweeted this morning:

    Go ahead & "Like" our new Right To Buy Facebook page to give 100,000 hardworking families chance to own their own homes http://ow.ly/1JObtv

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