How does the right to buy effect UK property prices?

How does the right to buy effect UK property prices?

How does the right to buy effect UK property prices?

Not since the 1980s, when Margaret Thatcher introduced the right to buy council housing, has this particular subject been such a hot political potato. In England we have the current coalition government firmly behind a new right to buy movement while the SNP in Scotland is actually looking to buy back previous council housing. So, what are the pros and cons of the right to buy given to various council tenants around the UK?

Encouraging home ownership

While many people may not be aware, the US market has historically been dominated by the rental sector although this is slowly but surely changing. This is a situation we take for granted in the UK where the home ownership market has historically been much larger than the rental arena. This situation is beginning to change with house prices moving out of the reach of many first-time buyers but there is no doubt that the 1980s right to buy movement did encourage more home ownership across the UK.

It will be interesting to see how the very different views on right to buy are introduced across the UK with some regional authorities very much for the movement while others are firmly against the idea.

Feeding the rental market

The Conservative government of the day back in the 1980s firmly believe that the right to buy council property would encourage homeownership. If we look back 30 years there is no doubt that this policy has had an enormous impact on the UK market but perhaps not the type of impact many had foreseen.

It is now common knowledge that potential first-time buyers in the UK are struggling to raise the required deposit, let alone a mortgage, with house prices moving out of the range of many people. In what is becoming something of a self-fulfilling prophecy, with more and more people moving out of the parental home predominately into rented property, this is feeding the buy to let arena. As more buy to let investors enter the market this pushes house prices higher and higher, further and further out of the reach of first-time buyers. Are we seeing the creation of a vicious circle?

Social housing shortage

Each and every political party readily acknowledges that there really is a significant shortage of social housing across the UK. This shortage is feeding the private buy to let market although there are plans to build more social housing in the short, medium and longer term. Indeed we have seen promises that all funds raised by the right to buy policy will be ploughed back into the social housing new build market. There are also many promises relating to the number of overall new builds across the UK with some political parties suggesting up to 300,000 over the duration of the next Parliament!


The right to buy council property certainly encouraged homeownership across the UK but has predominately led to increased demand for private rental properties. This in turn has increased investment in the buy to let market, pushing prices out of the reach of many first-time buyers and creating something of a vicious circle. There will always be peaks and troughs in the UK property market, and indeed any other property market, but those with a sensible long term buy to let strategy would seem to be extremely well positioned going forward.

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