A new generation of social housing tenants in the UK are being encouraged to buy their homes as part of a reinvigorates Right to Buy system.
The new plan has been launched by Prime Minister David Cameron and Housing Minister Grant Shapps and gives some 2.5 million tenants the opportunity to buy their home with dramatically increased discounts of up to £75,000.
They said that the move will reverse years of declining discounts for tenants, which made Right to Buy meaningless in many parts of the country. Fewer than 3,700 sales were made last year compared to a peak of 84,000 less than 10 years ago.
This will mean, for example, that someone in Birmingham who had been a tenant for fifteen years could buy their £90,000 flat with a discount of £63,000 compared to £26,000 previously, almost trebling their discount and in London, a tenant for five years buying a flat worth £160,000 would receive a discount of £75,000, more than four times the previous cap of £16,000.
Also, to help councils fulfil their legal duty to inform tenants, the government is making a range of materials available to ensure potential buyers are aware of the changes and understand the steps they should take if they decide Right to Buy is the right choice for them.
The government believes it has moved swiftly to introduce the new discounts, and councils should waste no time getting in touch with their tenants, so as many as possible can take advantage of the scheme and use the discount as a firm foundation for home ownership.
For the first time, the additional homes sold under the revamped scheme will be replaced by new properties for affordable rent, ensuring there is no reduction in the number of affordable homes.
Councils will be able to sign an agreement with the government for using the receipts from sales to build new affordable homes in their area. The receipts will be expected to meet up to 30% of the costs, mirroring the highly successful funding model used for the Affordable Homes Programme, which has exceeded all expectations and will deliver up to 170,000 new affordable homes by 2015.
‘I want many more people to achieve the dream of home ownership. In the 1980s, Right to Buy helped millions of people living in council housing achieve their aspiration of owning their own home. It gave something back to families who worked hard, paid their rent and played by the rules. It allowed them to do up their home, change their front door, improve their garden without getting permission from the council. It gave people a sense of pride and ownership not just in their home, but in their street and neighbourhood, helping to build strong families and stable mixed communities,’ said Cameron.
‘But over time the discounts were cut, they didn’t keep pace with rises in property prices, and this vital rung on the property ladder was all but removed. This government is now putting it back by dramatically increasing the discount rates so that we support the dreams of those council tenants who to want to own the roof over their head,’ he added.
Shapps agreed that years of punitive limitations on the level of discounts under Right to Buy have sabotaged the aspirations of hardworking council tenants who want to take their first step on the property ladder.
‘This government wants to help everyone achieve their aspirations so I’m delighted to announce that from today these miserly restrictions on discounts are history, and tenants will once again receive genuine assistance to feel the pride of home ownership,’ he pointed out.
Where receipts are not used locally to build new homes they will be passed to the Greater London Authority and the Homes and Communities Agency, who will re-invest the money in new affordable housing across the country.