Shapps unveils £50,000 discounts for council tenants to buy their homes

Published by Ross Macmillan for 24dash.com in Housing and also in Central Government, Local Government

The housing minister Grant Shapps plans to increase the cap on discounts for council tenants to buy their homes to £50,000, while pledging to replace every sold home with a new affordable one.

Mr Shapps said the restrictions on discounts over the past few years have made Right to Buy (RTB) meaningless in many parts of the country, with fewer than 3,700 sales last year compared to a peak of 84,000 less than 10 years ago.

Plans published in a consultation today increase the discount cap to £50,000, effectively trebling it in some parts of the country.

This will mean, for example, that someone in the West Midlands who had been a tenant for eight years on an household income of £20,000 could buy their £90,000 flat with a discount of £50,000 compared to £26,000 previously - effectively doubling their discount.

In London, a tenant for five years buying a flat worth £160,000 would also receive a discount of £50,000 - more than three times the previous cap of £16,000.

Housing association tenants with a Preserved Right to Buy - because their home was part of a housing stock transfer from a local authority - will also benefit from the enhanced offer.

Mr Shapps said: "When this Government came to power our inheritance was a paralysed housing market and a devastating collapse in construction. The builders had stopped building, and millions of hard-working, aspiring home owners were blocked from taking their first step on the property ladder.

"This is especially true for people living in social housing. The previous miserly restrictions on discounts meant Right to Buy became, for many tenants, nothing more than an empty promise - a social mobility scheme run by Ebenezer Scrooge. 

"That's why I am today publishing proposals that will dramatically increase the discounts under Right to Buy, ensuring it once again becomes a meaningful tool to support social tenants who want to buy the home they live in.

"But we are also determined to maintain the number of affordable homes for rent - so for the first time, every additional home that is sold will be replaced by a new affordable home on a one-for-one basis. The new homes for affordable rent will help get the nation building again, and help councils meet housing need."   

The consultation considers the different ways the receipts from additional Right to Buy sales could be used to deliver new affordable rent homes on a one-to one basis.

This will include options where councils keep the receipts and deliver the homes, and options where the Government collects the receipts and allocates funds to councils who offer the best value for money.

Cllr David Parsons, Chairman of the LGA’s Environment and Housing Board, said it is paramount that councils are given the ability to decide the discounts tenants receive to ensure there is enough money left to build new homes.

He said: "Any flat national rate would be arbitrary and could produce unexpected results due to house price variations across the country.

“In respect to the receipts from Right-to-Buy sales, it is vital that all of the money raised is kept by councils, to enable them to quickly invest in affordable housing locally. Councils are trusted by local people to ensure that housing meets their needs and must be given the means to do so.

“If the receipts are pooled nationally, not only will this lead to money being wasted on bidding processes and Whitehall bureaucracy, but it could hit families hard who are desperately waiting for an affordable home in their local area.

“It is also vital that when pushing out the right-to-buy scheme to tenants that they are given the advice and support they need. Councils are concerned that dodgy mortgage advisors could prey on vulnerable people, by offering them poor deals which could lead to an increase in repossessions and homelessness. Central government must ensure that resources are set aside to ensure tenants are protected from these mortgage companies.”