By Nick Mann | 22 December 2011
Plans to increase the discount offered to council house tenants who want to buy their homes have been published for consultation today.
Housing Minister Grant Shapps said ‘significantly increasing’ the cap on the discount to £50,000 across England would ‘revitalise’ the right to buy scheme.
According to the Department for Communities and Local Government, the changes mean a tenant in London buying the flat they have lived in for five years for £160,000 would find their discount more than trebled from the previous cap of £16,000.
Similarly, a tenant on an income of £20,000 a year in the West Midlands buying a £90,000 flat would see their discount almost double from £26,000 to £50,000.
The government then plans to use the receipts from additional right to buy sales to build new homes on a one-for-one basis. The consultation considers various options for how this could work, including where councils keep the receipts and deliver the homes, and others where the government collects the receipts and allocates funds to councils who offer the best value for money.
Shapps said the plans, which were first announced by the Prime Minister David Cameron at this year’s Conservative Party conference, would address the low discounts currently offered for right to buy which, he said, meant the policy had become ‘nothing more than an empty promise’.
There were only 3,700 sales under right to buy last year, compared to 84,000 less than ten years ago.
‘That's why I am today publishing proposals that will dramatically increase the discounts under right to buy, ensuring it once again becomes a meaningful tool to support social tenants who want to buy the home they live in,’ Shapps said.
‘But we are also determined to maintain the number of affordable homes for rent - so for the first time, every additional home that is sold will be replaced by a new affordable home on a one-for-one basis. The new homes for affordable rent will help get the nation building again, and help councils meet housing need.’
David Parsons, chair of the Local Government Association’s environment and housing board, stressed the need for councils to be responsible for deciding discount levels.
‘It is paramount that councils are given the ability to decide the discount tenants receive, to ensure that there is enough money from right-to-buy sales to build enough new homes. Any flat national rate would be arbitrary and could produce unexpected results due to house price variations across the country,’ he said.
Parsons also said councils should collect the receipts from right to buy sales to enable them to ‘quickly invest’ in affordable housing.
‘Councils are trusted by local people to ensure that housing meets their needs and must be given the means to do so,’ he said.
‘If the receipts are pooled nationally, not only will this lead to money being wasted on bidding processes and Whitehall bureaucracy, but it could hit families hard who are desperately waiting for an affordable home in their local area.’
Today also saw further details announced on another aspect of the government’s Housing Strategy, which was published last month. The Homes and Communities Agency has issued detailed guidance for developers planning to apply for a £420m fund that aims to enable construction to begin on stalled housing projects with planning permission.
The ‘Get Britain Building’ programme is intended to address difficulties in accessing development finance faced by some house builders and to help bring forward sites where viability is marginal by sharing risk.
It will operate by making loans available to projects on commercial rates, or taking equity stakes to share risk.
