Posted by: Jules Birch02/06/2009
No wonder receipts from right to buy sales have fallen off a cliff. A written answer in parliament yesterday reveals that the average right to buy discount has more than halved as a proportion of the full value of a home since 1997.
The average discount for tenants in England was worth 49% of the average value of a right to buy property in 1997/98 but by 2007/08 it had fallen to just 24%. As a proportion of the the average house price it fell from 27% to just 11%.
The trend was most dramatic in London, where the average discount was worth 53% of an average right to buy property 11 years ago but is worth just 13% now. In most other regions, the proportion fell from half to a quarter of the value of a right to buy home, with only tenants in the North West (32%) and West Midlands (30%) retaining a more generous shares.
The reduction is the result of remorseless increases in house prices since 1997 and of reductions in the right to buy discount under Labour, especially in London, and is now having a big knock-on effect on the finances of social landlords.
The intriguing thing now, given that the parliamentary question was tabled by Conservative housing spokesman Grant Shapps, will be what a future Tory government will do.
The Conservatives might be expected to act to revive their most iconic housing policy but may find it hard to justify increased discounts at a time when public spending is being cut drastically elsewhere.
‘Radical new housing policies’ launched by Shapps in April included a commitment that any tenant moving within the social sector will retain their right to buy discount but said nothing about reversing the Labour restrictions or a new right to buy for housing association tenants. However, the debate continues within the party.
From Inside edge
Housing commentator Jules Birch puts the latest news in context