Right-to-buy discounts increased
By Vivienne Russell | 12 March 2012
Council house tenants in England will be able to buy their
homes with discounts of up to £75,000 under the ‘rebooted’ right to buy scheme,
ministers have announced.
Following a consultation,
the Department for Communities and Local Government today published details of how the right to buy will work and the new discount levels
The maximum discount is set to increase from the £50,000
originally proposed to £75,000. This more than quadruples the discount
available in most parts of London, and trebles it for the rest of England. The
new cap will come into effect on April 2.
The DCLG said this would reverse the effect of the discount
caps imposed by the previous government, which had led to right to buy sales
falling from 84,000 in 2003/04 to 4,000 in 2010/11.
Heralding the plans, Prime Minister David Cameron said the refreshed
scheme would benefit 2 million social housing tenants in England.
‘It’s no good hoping people will climb the property ladder
if the bottom rung is missing,’ he said.
Housing minister Grant Shapps said the government was
‘scrapping the misery’ of restricted right to buy discounts.
But he added: ‘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 new affordable homes, helping councils meet housing need and
getting the nation building again.’
Councils will be able to enter into an agreement with
central government allowing them to keep the sale receipts if they think this
will cover 30% of the costs of building a replacement home.
Where councils do not wish to enter into such an agreement, sale
receipts will be used to fund new housebuilding more generally through either
the Homes and Communities Agency or the Greater London Authority.
The government has agreed to allow councils to retain a
higher proportion of the sale proceeds to cover their administrative costs.
London-based councils will be able to retain up to £2,850 for each right to buy
sale, while councils in the rest of England can keep £1,300.
Shelter’s chief executive Campbell Robb sounded a note of caution. He said: ‘We know
that right to buy mortgage holders are three times more likely than other
homeowners to be repossessed, so it’s vital that rigorous affordability checks
are in place to make sure people who are tempted by these schemes can truly
afford to buy their home.
very concerned that affordable homes sold under right to buy are not going to
be replaced like-for-like, but with homes where landlords can charge up to 80%
of market rents. At a time when we already have a critical shortage of
affordable housing in this country, this amounts to little more than
asset-stripping and will ultimately mean fewer genuinely affordable homes for
families struggling on low incomes.’
The Chartered Institute of Housing raised doubts over the government’s assertions that it would be able to replace each house sold through right to buy.
Chief executive Grainia Long said: ‘This provision will be difficult to maintain given the fixed discount policy announced today.
‘We also share the concerns of many housing professionals that high levels of discount might not lead to good value for the public purse at a time when the government is encouraging local authorities to get the best out of their assets.’
Labour councillors lambasted the hike in the discount as a ‘cynical move’ that would result in a ‘fire sale of community assets’.
Tony Newman, lead housing spokesman for the Local Government Association’s Labour group, said the announcement would do nothing to address the shortage of social housing.
‘The centralising approach of the government means that social homes will be sold off at a discount decided in Whitehall with no regard for the local market. The one-for-one replacement proposals do not stack up,’ he said.
The government also announced that it would provide mortgage
security for prospective housebuyers who lack sizeable deposits.
The NewBuy Guarantee has been backed by three high street
mortgage lenders and seven construction firms. It will offer mortgages on
newbuild properties for people who can only provide a 5% deposit. The
government and housebuilders will provide security for the loan, so that if the
property is sold for less than its outstanding mortgage, the lender will be
able to recover the loss.
Shapps said the NewBuy Guarantee would ‘give thousands of
prospective buyers the chance to buy a home with a fraction of the deposit