Radical reform of Right To Buy demanded by industry group

A property industry group has called for a reduction in the discounts available for council tenants buying their own home, after finding that homes in weaker markets have been sold for as little as £15,000.

The report also calls for an end of the Right to Buy on new build homes, and the introduction of a ‘Buyers’ Charter’ to prevent apparent unfairness in and abuse of the system.

The Right to Buy gives council tenants the right to purchase the home they are currently renting from a local authority at a discount. Tenants are eligible to purchase after they have been a social tenant for three years, and the discounts go up for each year they are a tenant, to a maximum of 70% of the property value, capped at £96,000 (or £127,900 in London).   

Sales were highest during the 1980s, with over 1.4m homes sold between 1980 and 2000. In 1999 discounts were significantly reduced, and sale rates fell sharply after the 2008 financial crash. In 2012, a beefed up version of Right to Buy increased sales to where they are today, at up to 12,000 per year.   

The Housing Forum’s report identifies three principal issues with Right to Buy.  

- The selling of council homes has increased in the past 10 years, with 113,000 homes sold in this time, and some councils losing as much as 10% of their stock. At the same time, the number of households in temporary accommodation has doubled to over 100,000;

- There is apparent abuse in the system, and unfairness. Often tenants bought properties with gifts or loans from other family members, or bought their homes shortly after being in arrears or on benefits shortly before, indicating a high degree of economic need. And tenants were found to often buy homes only to sublet them on the private market shortly after; and 

- The threat of homes being bought makes councils more wary of building new homes, with most council homes being sold at a loss due to the high discounts mandated. One council has calculated that they need to sell six homes via the Right to Buy to create enough funding to build one new one. 

In response to these findings, The Housing Forum has recommended reforms including a ‘Buyers Charter’ for those purchasing council homes, removing the Right to Buy from newbuild homes, and ensuring that councils receive the full value of Right to Buy sales.   

This Buyers’ Charter would include the following provisions:  

- Covenants should be placed on sales to either prevent the property from being let out, or alternatively to require them to be offered to the council to let, if they are not being used for owner-occupation;   

- Discounts on a home should be reduced to no more than 20% of its value;

- The length of residency required to purchase should be increased to at least five years;   

- The exemption criteria should be modernised to include larger homes and those designed for specialist needs; 

- The details of the ‘Buyers Charter’ should be devolved to local councils. 

Housing Forum director of policy and public affairs Anna Clarke says: “Our members across the housing sector work hard to increase the supply of affordable housing and know how badly this is needed. Forcing councils to sell off their housing at prices much lower than it costs to rebuild it leaves them fighting an uphill battle.  

“Many councils are keen to build new council homes – but they’re put off doing so by the risk of having to sell their new homes off as fast as they can build them. 

“We hope that the proposals set out here will provide some ideas for ways that the Right to Buy could be reformed to give councils the confidence to invest in new homes, as well as addressing some of the wider concerns around fairness.”: