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LGA warns Right to Buy has become ‘unsustainable’

Words: Laura Edgar
Right To Buy / iStock-547451008

Nearly £3.5 billion Right to Buy discounts have been handed out in the past six years, sparking a ‘fire sale’, according to the Local Government Association (LGA).

In response to its own analysis, the LGA has warned that the Right to Buy scheme has become “unsustainable and risks becoming a thing of the past” unless councils are allowed to set discounts locally and replace every home sold.

Judith Blake, housing spokesperson for the LGA, said: “Councils support people’s aspiration to own their own home and Right to Buy is one way of doing this.

“However, selling council homes at a discount of nearly half price has led to a social housing fire sale that threatens the future of the scheme. The rate of homes sold under Right to Buy combined with the restrictions on councils is making replacing homes sold virtually impossible.”

In April 2012, the then coalition government increased the size of discounts available. This has seen the average discount increase by 132 per cent to more than £60,000 in 2016/17, with properties selling at almost half price, said the LGA.

This, according to councils, has led to a quadrupling in the number of Right to Buy sales, which they have been unable to keep up with and replace.

Currently, councils can keep one-third of each receipt to build a replacement, with the system not allowing authorities to borrow to make up the shortfall. Therefore, around a fifth of homes have been replaced since 2011/12.

LGA stats:

  • £26,690 (25 per cent of the property value) – the average discount for a council tenant purchasing under Right to Buy in 2011/12. This rises to £61,810 (43 per cent of the property value) in 2016/17.
  • During this period – 2011/12-2016/17 – councils have reported a 409 per cent rise in Right to Buy sales, equating to nearly 58,000 councils homes sold.

Ahead of the final Local Government Finance Settlement this month, the LGA has called on the government to ensure that Right to Buy works for future generations by allowing councils to set discounts locally and keep 100 per cent of sale receipts so that they can replace homes. Additionally, the representative body for 370 councils in England and Wales wants a complete scrap of the cap on the amount councils can borrow to invest in new and existing homes.

The data the LGA used can be found on the UK Government website (Excel).

Image credit | iStock