The Deputy Prime Minister, John Prescott, has released measures to curb the right-to-buy scheme in those urban and rural areas suffering the greatest shortage of affordable housing.
The change will see maximum discounts available to council tenants purchasing their homes more than halved to £16,000 in the areas targeted. Forty-two local authorities in parts of London and the South East have been asked to join the scheme.
The authorities concerned will be given two weeks to opt out if they can demonstrate reduced discounts would not be justified in local housing market conditions. The Government is also widening the scope of restrictions on right to buy resale, to protect affordable housing in rural areas.
Mr Prescott said: ‘I am totally committed to the principle of right to buy. We are not abolishing the scheme, but modernising it. In certain housing crisis areas, right to buy has had an adverse effect on the supply of affordable housing, penalising those who desperately need somewhere to live.’
This will make right to buy much less attractive to companies seeking to profit from ex-local authority property. Research from the Office of the Deputy Prime Minister found that between 1998 and 2001, companies making deals with tenants to acquire the properties for their own speculative purposes purchased 5% of all council home sales in inner London.
John Wrigglesworth, housing economist for Hometrack, said: ‘The main result is that fewer council house tenants will become homeowners, which will mean fewer ex-council houses eventually arriving on the market, marginally positive to the market, but a small effect.’
Current maximum discounts are still available to tenants who apply before the change comes into effect in March 2003. The new discount level will fall in line with that available to assured housing association tenants under the right-to-acquire scheme.