The Minister has published new proposals that will significantly increase the discounts available under the scheme, making it easier for some of the two million social tenants in England to buy the home they live in.
Shapps said the restrictions on discounts over the past few years have made Right to Buy meaningless in many parts of the country, with fewer than 3,700 sales last year compared to a peak of 84,000 less than 10 years ago.
So the Government is proposing to increase the cap to £50,000, effectively trebling the discount in some parts of the country so more tenants can get a foot on the property ladder.
Thirty years after the original launch of Right to Buy, Ministers believe it can once again promote opportunity and boost social mobility for the nation's social tenants, and at the same time transform housing estates.
Shapps said that the government is committed to ensuring that there is no reduction in the number of affordable homes so that for the first time any additional home bought under the scheme will lead directly to the provision of a new affordable home for rent on a one to one basis.
‘When this Government came to power our inheritance was a paralysed housing market and a devastating collapse in construction. The builders had stopped building, and millions of hard working, aspiring home owners were blocked from taking their first step on the property ladder,’ said Shapps.
‘This is especially true for people living in social housing. The previous miserly restrictions on discounts meant Right to Buy became, for many tenants, nothing more than an empty promise, a social mobility scheme run by Ebenezer Scrooge. These proposals 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,’ he explained.
‘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,’ he added.
The proposals will mean, for example, that someone in the West Midlands who had been a tenant for eight years on an household income of £20,000 could buy their £90,000 flat with a discount of £50,000 compared to £26,000 previously, effectively doubling their discount.
In London, a tenant for five years buying a flat worth £160,000 would also receive a discount of £50,000, more than three times the previous cap of £16,000.
Housing association tenants with a Preserved Right to Buy, because their home was part of a housing stock transfer from a local authority, will also benefit from the enhanced offer.
Proposals will now be discussed with key partners including landlords, lenders and tenant organisations. This will include ways to ensure tenants are fully informed about the new opportunities, and landlords are fully geared up to respond and support tenants' ambition for home ownership.
The consultation will also consider the different ways the receipts from additional Right to Buy sales could be used to deliver new affordable rent homes on a one to one basis. This will include options where councils keep the receipts and deliver the homes, and options where the government collects the receipts and allocates funds to councils who offer the best value for money.
The revived Right to Buy will support radical reforms being introduced by the government that will untie the hands of councils so they can manage their social housing more effectively.
The consultation follows the announcement of the expanded Right to Buy in the government's new housing strategy, which includes a comprehensive package of support for the housing sector. Steps will be taken to tackle a range of issues facing the housing market, from boosting supply and making it easier to secure mortgages on new homes, to ensuring homes that have been left empty for years are lived in once again.
Responding to the announcement, Council of Mortgage Lenders director general Paul Smee, welcomed the consultation. ‘It is worth noting that the Financial Service Authority’s recently published mortgage market review proposals would require advice to be given on all lending to Right to Buy borrowers, which is a significant protection that we think makes sense,’ he commented.
‘As with all other mortgages, lenders will need to conform to all relevant regulatory requirements, reflect their own risk appetites and take account of both the borrower's circumstances and whether the property represents adequate security, just as they do on all lending,’ he added.
