The Government has confirmed that it is committed to retaining the Right to Buy as an important route for social tenants to achieve home ownership. However, achieving a scheme that is both ‘sustainable and fair’ requires new protections to ensure social housing is available in the long-term to meet future housing needs alongside encouraging new supply by giving councils the confidence to build new homes.
As a first stage, the Autumn Budget announced changes to the maximum Right to Buy cash discounts. These were reduced to pre-2012 levels, namely between £16,000 and £38,000. In addition, the cost floor protection period was increased from 15 to 30 years and councils will now no longer be required to return a proportion of RTB receipts to the Treasury.
The Government is now considering wider changes which are likely to require legislation. A consultation Reforming the Right to Buy was published on 20th November seeking views on further reforms, including increased protections for new build and changes to eligibility requirements.
The key areas under consideration are set out below:
- Eligibility
The consultation includes options on increasing the 3 years minimum public sector tenancy currently required to 5 years, 10 years or more than 10 years. Views are also sought on whether someone should be excluded from the scheme if they have benefitted previously.
- Discounts as a percentage of the property value
It is proposed to amend the current percentage discounts to align better with the new maximum cash discounts and that the same rules should apply to houses and flats.
Views are invited on reducing the minimum discount to between 0% and 5%, and the maximum discount to between 5% and 20%. The discount would increase by 1% for every extra year that an individual has been a public sector tenant, up to the maximum.
The consultation paper also asks whether maximum discounts specified in cash terms should be retained or whether they would be made unnecessary by the amendment of the maximum percentage discounts.
- Exemptions
The consultation seeks views on whether the current exemptions to the scheme are fit for purpose and whether new-build homes should be exempt from the Right to Buy for a specified period to better incentivise councils to invest in new stock. Views are also sought on how to protect council investments in retrofitting and other major improvement schemes.
- Restrictions on the use of the property after sale
Concerns have been raised around too many homes sold under the Right to Buy being let out. The Government does not propose to introduce covenants to prevent homes being let out, as this would be unduly restrictive and difficult to administer. Similarly, there is no intention to create a discount in perpetuity, as the complexity of the proposition is likely to outweigh any benefits.
Views are however sought on whether the time period in which the council has the right to ask for repayment of all or part of the discount received should be increased from 5 to 10 years.
- Requirements around the replacement of homes sold under the Right to Buy
The consultation asks whether replacement homes be primarily for Social Rent, and as far as possible, of the same size and in the same area as the properties that have been sold. Also – should there be a target to replace all future Right to Buy sales on a one-for-one basis?
- Simplification of the RTB receipts regime –
Under the current arrangements, the capital receipt generated from the sale of a home is divided into six parts (after funding the discount). Views are sought on how the system can be simplified and strengthened to better support the objective of replacement of homes.
The consultation paper also confirms that the Government will not be progressing proposals to extend the Right to Buy to housing association tenants and the previous Government’s policy on the sale of higher value assets proposed in the 2016 Housing and Planning Act will be repealed when Parliamentary time allows.
The consultation closes on 15th January 2025
