Right to Buy Discount Increases

Article

27 June, 2014

The Right to Buy scheme was introduced in 1980 and is designed to assist social tenants buy their home at a discount throughout the UK. Since 2012 the maximum discounts were increased from as little as £16,000 in some areas, to £75,000 in others. Under new legislation, the maximum discount for a house purchased under Right to Buy will increase from 60% to 70% of its value, and the £75,000 cap will start increasing in line with the consumer price index rate of inflation. For the first time, money raised through extra sales of Right to Buy properties will be put towards building new affordable homes for rent.

It is estimated that over 19,000 social housing tenants have now become homeowners under the Right to Buy scheme which has generated more than £400 million to fund new affordable homes for rent. In their 2011-2015 Housing Strategy, the Government put forward their intention to increase the caps on Right to Buy with the aim of enabling more tenants to achieve home ownership whilst helping to maintain a steady stream of affordable housing.

The Housing (Right to Buy) (Limit on Discount) (England) Order 2014 will come into force on 21 July 2014. The maximum discount tenants will be entitled to outside of London until 05 April 2015 will be £77,000. These amounts then increase each year (from 06 April 2015) by the percentage change in the consumer prices index and published by the Statistics Board, and that figure is to be rounded down to the nearest £100. These new maximum discounts will apply to any right to buy applications made by notice under section 122 of the Housing Act 1985 served after the date this Order comes into force.

Mr Eric Pickles, Communities Secretary said the changes ensure Right to Buy will become a realistic prospect for thousands of social tenants across the country. Concerns have been raised however about the number of homes that will be lost through Right to Buy. The Government must ensure those homes are replaced on a like for like basis to reduce the impact and to use the money raised to help drive house building across the country. There are also proposals to reduce the minimum number of years spent as a public sector tenant from five years to three years to become eligible. This is yet to be enforced but it is suspected it will come into effect some time in 2014.

For further information please contact Lucy Worrall on 01254 222399 or by email Lucy Worrall

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