RTB might not deliver one-for-one replacement
The government will not be able to deliver on its promise to provide a replacement affordable rent home for every sale under the right to buy without additional subsidy, it has been claimed.
New research, coming in the wake of today’s launch of a consultation on right to buy, has claimed that 1.4 sales would be needed to fund one-for-one replacement if discounts for tenants were increased in line with government recommendations.
The consultation, published by the Communities and Local Government department, proposes a cap on discounts of £50,000 - effectively tripling the discount for London-based tenants.
But research carried out by property analysts Hometrack has found that the average receipts from sales with the new discount would be £64,725, which is significantly lower than the cost of delivering a new property and lower than the current average receipt of £77,470.
The research found that each new home would require, on average, 1.4 right to buy sales, with new properties in the capital needing 1.6 sales.
‘With lower levels of capital receipt per sale, the ability to achieve a one-for-one replacement rate may be difficult,’ said Richard Donnell, director of research at Hometrack. ‘Extra subsidy in the form of development on low cost public land may have to play a vital role if this policy objective is to be met.’
Hometrack also found that 65 per cent of council tenants would be able to afford to buy their homes with the increased discount, although only a small portion would be able to access a mortgage as just 16 per cent are in full-time employment.
The analysis further showed that, in London, the discount required to make homes affordable for council tenants would need to be £128,000, based on average property prices and incomes.