The Government has proposed making significant changes to the Right to Buy scheme with the aim of boosting social housing stock, including the level of discount offered and how long tenants must live there before they qualify.
Right to Buy is a Government-backed scheme designed to help council tenants to buy the property they are living in at a discount. Under current rules, you need to have been a tenant for at least three years to qualify for the scheme, and the longer you’ve lived in your home, the bigger the discount you’ll be entitled to.
For example, if you’ve been a tenant in your council house for three years, you’re currently entitled to a 35% discount off the market value of the property, rising to 50% if you live in a flat. After five years, you’ll get an extra 1% discount for every additional year you live there if you live in a house and 2% if you live in a flat. The maximum discount you can get it 70% off the property’s market value.
Rachel Reeves, the chancellor, announced in the October budget that the Government would reduce the discount tenants could claim. The government is suggesting capping maximum discounts at their pre-2012 levels of between £16,000 and £38,000, with the level of discount depending on the area in which the tenant lives. Under the proposed plans, councils will be allowed to reclaim the discounts if a buyer resells within 10 years, up from five years currently.
The new consultation on Right to Buy, unveiled this week by Housing Secretary Angela Rayner, also proposes that tenants must live in their properties for a minimum of five rather than three years before they can qualify for Right to Buy, which was previously the requirement between 2004 and 2015. The Local Government Association has suggested that the minimum tenancy should be much longer still, at 15 years.
The consultation will also look at whether people should be prevented from exercising the Right to Buy if they have previously benefitted from the scheme, or if they own another property.
The Government claims that if adopted, these changes would reduce the number of people purchasing their homes using Right to Buy by around 25,000 over five years, keeping more properties in the social rented sector.
It’s proposed that newly built social homes won’t be included in the scheme at all, and local authorities will have to build a home for every property they sell via the Right to Buy scheme, again helping to boost social housing stock.
If you’re looking to buy a property using Right to Buy, seek professional advice if you need help choosing a Right to Buy mortgage, or if you want to find out which lenders will accept your discount as a deposit. Find out more here.
