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Right To Buy extension to be announced in Queen’s speech

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  • 26/05/2015
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As part of a new Housing Bill, the government has confirmed controversial plans to extend the Right To Buy scheme to 1.3m housing association tenants.

The full plans will be announced on Wednesday, 27 May in the Queen’s speech, alongside plans for a Right To Build scheme.

The new bill extends the Right to Buy rented homes to local housing association tenants at discounts of as much as £103,000 in some cases. Tenants need to have lived in homes for over three years and National Housing Federation (NHF) figures suggest 850,000 homes could be eligible for the scheme at a cost of £11.6bn if take up is an unlikely 100%.

The extension to the original Right To Buy scheme, launched by Margaret Thatcher in the 1980 Housing Act is a controversial move, as it forces not-for-profit landlords to sell valuable housing stock and replace it on a one-for-one basis.

Figures out from Shelter today suggest the government has failed to fulfill the rebuild part of the scheme at a time when there is political consensus that building homes has fast become critical in the UK.
Shelter figures show 863 social rented homes have been sold in Greater Manchester since 2012, when the promise of one-for-one replacements was first made. Yet of those only two have been replaced: two connected semis on a cul-de-sac in a Wigan suburb.

Campbell Robb, chief executive of Shelter, said: “You simply cannot solve this problem by selling off affordable homes, not replacing them, and ignoring the country’s 11m renters.”

Department for Community and Local Government figures confirm the scheme has regained popularity since the coalition increased the average discounts from 1 April 2012 and the property inflation rebounded. In 2013/14, 11,261 social tenants bought their homes, with figures on the rise since to 3,285 in Q3, the highest tally since Q2 2007.

The figures show the average council receipt per sale rose to £75,000 in Q4 2014.

NHF estimates suggests between 15 to 35% of social housing tenants could afford to take up the scheme at 95% Loan to Value.

Under Conservative plans, the discount would start at 35% and increase by one percentage point for every year of tenancy in the same home. This rises up to a maximum of 70% or a cash cap of over £103,000 in London, or just under £80,000 elsewhere.

The same figures suggest the household income required to afford a 95% mortgage after the discount varies between £14,000 and £31,000 on the average Right to Buy sales price.

Joe Sarling, a senior analyst at the National Housing Federation,said: “With so much at stake, there are too many unanswered questions about how the policy would work in practice and the impact on affordable housing supply across the country.”

Scottish Parliament voted to abolish the scheme by 2016 in June last year.

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