“Reforming Right to Buy” – a missed opportunity

Having reduced the discount for Right to Buy by executive action (varying from £16,000 to £38,000), the government is proposing a number of reforms (see below) which will require legislation “when Parliamentary time allows”. These are obviously designed to cut the number of sales. No surprise, as we said they would, the Tories have denounced the proposals as being opposed to “aspiration”; the same argument they would have used if the government had proposed to end RTB. Their refusal to do so was based on a fear of taking on that argument. Right to Buy was never about aspiration, but self-interest and disregard for the social consequences of the loss of homes to local authorities. Politically, the sales were designed to undermine political support for Labour on council estates, by mobilising self-interest. Councils also lost rental income which made housing revenue accounts poorer, with less income to maintain the shrinking number of homes.

We were concerned that if the level of discount was simply left as executive action then the next government could reintroduce the previous discounts without Parliamentary discussion. The proposal to restrict discount to 15%, if enacted in law, would at least mean a future government would need to introduce primary legislation, or amend law enacted by this government.

Whilst the government is also proposing to end the Tories restrictions on use of Right to Buy receipts, e.g. allowing them to use them in conjunction with grant from Homes England, the amount of receipts will fall considerably. They will not support delivering many new homes. Use of RTB receipts was always a poor substitute for central government funding. Moreover, there could be little more infuriating than councils using RTB receipts to buy back ex-council properties previously sold, though at much higher market rates.

In Scotland and Wales, where Right to Buy has been abolished, there has been no attempt to reintroduce it. With a big Parliamentary majority the government could have easily abolished RTB. We will see what level sales settle at, but councils will still have to spend to replace homes sold. Obviously changes that reduce the number of sales are better than the status quo but these reforms represent a missed opportunity. Ending RTB would have ensured that every new home built would have increased the housing stock for the first time since it was introduced.

We are currently waiting to see how many sales took place in 2024/25. Since the government gave notice of a deadline for the previous much higher discounts there was a huge increase in applications. Estimates of the loss of 20,000 have been suggested.

Reforming Right to Buy

“6. We intend to bring forward legislation to implement the following reforms when Parliamentary time allows:

• Increase the eligibility requirement (currently 3 years as a public secure tenant) to 10 years, to support councils to rebuild their stock and to better ensure that it is tenants who have lived in, and paid rent on, their homes for many years that are able to own their home through the scheme.
• Prevent existing property owners, or those that have previously benefitted from the scheme, from exercising the Right to Buy unless there are exceptional circumstances, e.g. victims of domestic abuse.
• Amend discount rules so that discounts start at 5% of the property value and increase by 1% for every extra year an individual is a secure tenant up to the maximum discount of 15% of the property value or the cash cap (whichever is lower). The same rules will apply to houses and flats. This will ensure that longer standing tenants gain a superior discount whilst better aligning the percentage discount regime to the new cash caps.
• Exempt newly built social and affordable housing from the Right to Buy for 35 years, which would have no impact on tenants wanting to buy their current homes but would significantly support councils to build. We will also update definitions for existing exemptions to remove outdated terms.
• Increase the period from 5 years to 10 years that the council has the right to ask for repayment of all or part of the discount on the sale of property.  We will also extend the period in which a local authority has the right of first refusal when a property previously bought under the Right to Buy is sold so that it applies in perpetuity.

7. The government will also amend the agreements made with local authorities under Section 11(6) of the Local Government Act 2003 on the use of Right to Buy receipts to simplify the rules and ensure that a greater proportion of receipts are used to deliver new social and affordable housing. In addition, we will extend the existing flexibilities in spending receipts indefinitely and, from 2026-27, will permit councils to combine Right to Buy receipts with grant funding for affordable housing to accelerate delivery of replacement homes.