The Conservative Party has announced its proposals to extend the right to buy provisions to assist housing association tenants in buying their own homes.
Under the current provisions secure tenants of council properties have a right to buy their properties at a discount of the market value provided they have been a secure tenant for 5 years or more. The discount depends on whether the property is a house or a flat and also the length of time they have been a tenant and also varies depending on which area in the UK the property is located. The maximum discount is £77,900 outside London and £103,900 inside London.
Right to buy was introduced in the 1980’s. At the time an estimated 6 million tenants could potentially benefit with approximately one third of those taking advantage of the scheme. By 1987 over 1 million homes had been purchased in this way with discounts ranging between 33-50% of the market value to reflect the rent already paid. The right to buy scheme has been criticised for creating a shortage of quality housing stock and leaving poorer quality stock remaining in less desirable areas. Scotland are abolishing the right to buy scheme with Wales set to follow.
Since 1997 some assured tenants living in housing association properties have had the right to acquire under their tenancy agreements. Right to acquire offers smaller discounts than right to buy. The conservatives propose to extend the right to acquire scheme to those assured tenants whose tenancies do not permit any right to purchase. An estimated 800,000 housing association tenants have the right to acquire already. The scheme would be extended to a further estimated 500,000 and give the same level of discount as council tenants purchasing under right to buy and an estimated 15,000 homes would be sold and replaced every year by building new homes.
Local authorities would be required to sell high value properties rather than re-let when tenants move out with the proceeds being used to build new homes and to compensate housing associations for their financial loss.
Housing associations have threatened legal action if they these provisions come into force. The proposals have been criticised as being economically illiterate and morally wrong in the current housing crisis with an estimated 1.8 million families waiting to be re-housed.