Right to Buy: Future council tenants 'set for higher rents'

An expert has warned that the Government's reinvigorated Right to Buy (RTB) scheme is good for current tenants - with attractive discounts on offer - but will leave future tenants paying more expensive rents.

Housing minister Grant Shapps says he is committed to replacing each home sold through the programme with a new one let at a higher rent.

This is so councils and housing associations can borrow against future revenue streams to replace the sold stock, as the cash received per sold home will only be a fraction of the build cost of a new one.

Responding to today's RTB consultation, former Housing Corporation boss Steve Douglas - now a partner at consultancy Altair - warned the deal would leave future tenants with higher rents.

He said: "We now have the detail and it’s good news for existing tenants - with the higher allowances - but not so good for future ones with higher rents to be the norm. The policy is more 'buy cheap now, and rent more expensive later’.

Mr Douglas added: "...it’s good that the government has acknowledged  that the receipt will only be a fraction of the cost of a replacement home.

"It’s clear, the sold one build one pledge only works if local authorities and housing associations are prepared to play ball and increase their borrowing against future rental streams on the one hand and discount land receipts on the other.  Some may be interested, many won’t."

He said the proposals are the first big test of whether the spirit of the Localism Act is now part of government policy making.

He said: "The options for distributing the receipts range from a top down approach to full devolution of responsibility. It will be interesting to see where we end up."

According to the Government, there were 3,700 sales last year through Right to Buy compared to a peak of 84,000 less than 10 years ago.