Call to address 'glaring conflict' between home ownership schemes

Published by 24publishing for 24dash.com in Housing and also in Local Government

The Government is being urged to sort out the "glaring conflict" between two of its home ownership schemes that could see thousands of council homes sold off to "high earners" instead of being used for people languishing on waiting lists.

It follows the Government's move to hand council tenants up to a £75,000 discount on the sale price of their home - through the Right to Buy - regardless of income; while capping its HomeBuy shared ownership and shared equity assistance schemes to people earning below £60,000.

One council worker who administers the HomeBuy options for her local authority said the "glaring conflict" was unfair, especially since HomeBuy applicants were expected to "mortgage themselves up to the hilt if they want any assistance".

She said: "Both schemes are supposed to be there to help people who can't afford to buy on the open market; to make their 'dreams and aspirations of home ownership' come true. But, on the one hand this says 'if you earn over £60,000 you don't qualify for HomeBuy assistance because we think that you can access the market at that income and above', but to Right to Buy tenants, it effectively says 'apply, qualify and just buy, take as little mortgage as you can get away with, have the discount of up to £75,000; if you earn more than £60,000, that's fine, you can spend your surplus income however you want.'"

She added that with the absence of a Right to Buy income cap the country risked "not only losing more council homes via the Right-to-Buy that we cannot afford to replace with the net receipts, but we are also giving away huge discounts to high earners who can actually afford to exercise options in the open market that the majority of the population - including thousands on local authority waiting lists - can't afford to exercise."

The Government is also set to introduce an income cap for social housing through its 'Pay to Stay' proposals, which will see households earning over £60,000 asked to move out of social housing or pay market rents. The measure is thought to affect some 34,000 households.

The council worker added that the 'disparity' could be addressed in the 'Pay to Stay' consultation.

She said: "I think it is more likely an oversight, something that has crept up on them, (Right-to-Buy income levels were never thought to be an issue in the olden days and of course there were no other home purchase assistances schemes on offer then either), but that does not make it fair to leave it as is."

Last week Labour councillors in Westminster questioned the local authority about whether it made "economical sense" to hand tenants earning more than £60,000 a £75,000 discount to buy their council home. It highlighted that the London borough is set to sell 175 flats over the next three years to households earning over £60,000 a year.

Councillor Paul Dimoldenberg, Leader of the Labour Group, said: "Why are some people getting a huge helping hand in the form of a £75,000 subsidy, when so many people are living in overcrowded conditions or who are paying ever-increasing private rents with no prospect of getting on the first rung of the housing ladder for decades?”

A spokesperson for Communities and Local Government said: "Right to Buy is a statutory right for eligible tenants, introduced in 1980. The longer someone has been a tenant, the more discount they get on the market value of their home, regardless of their current income. It is fair that the discount someone receives reflects how long they have lived in their home and paid their rent.

"There are no plans to change this. But we are, for the first time, aiming to use the extra funds from additional Right to Buy sales to provide new affordable homes for rent on a one for one basis, enabling more people in housing need to access affordable housing."