The deadline for applications for right-to-buy mortgages before the lowering of the maximum discount for buyers has now passed.
Forty-one local authority areas in London and the South East had the maximum discount available on right to buy lowered from £38,000 to £16,000 on 27 March, in a bid by the Government to ‘tackle severe housing pressure and discourage the exploitation of rules.’ All applications received before this date will be eligible for the higher discount.
Since 1980 over 1.5 million local authority tenants have exercised their right to buy, but concerns over individual tenants buying to let and third-party companies seeking to benefit from cash gains have put pressure on the availability of affordable housing.
Speaking before the deadline, John Prescott, Deputy Prime Minister, said: ‘Reducing maximum discounts will straight away act as a disincentive to companies who are profiteering from the right-to-buy scheme. These companies are offering a short-term cash solution to those who are most vulnerable.’
Further restrictions may be placed on right to buy as the draft Housing Bill plans to extend the qualification period from two to five years. And also to extend the period after sale during which borrowers can be forced to repay some, or all, of their discount upon resale from three to five years.
Despite this, conveyancing specialist, Barnetts Solicitors, claimed the next area of the market to go through a remortgaging boom will be the right-to-buy sector.
Tony Swift, partner at Barnetts Solicitors, said: ‘It represents a marketing opportunity for lenders and financial advisers to make homeowners aware of the scope for reducing the cost of mortgage payments by remortgaging at a time when rates are at historically low levels.’