Right to Buy sales up 500%
A new analysis from the Local Government Association (LGA) has revealed that the sale of social housing under the Right to Buy (RtB) scheme has risen by 409% since 2012 – a figure that represents the sale of 58,000 council homes. The stats present cash-strapped councils with additional budget concerns as they try to create fresh housing stock. However, some commentators are suggesting solutions that could improve finances in the long term.
Costly discounts
It’s not just replacing housing stock that is concerning councils: also up for debate is the level of discount applied to RtB properties. In 2012, the government raised the maximum discount to £75,000; it has since been lifted to £100,000 in some areas.
The LGA has calculated that the move resulted in the average discount on a property's value rising from 25% in 2011/12 to 43% in 2016/17. Commenting on this change, Cllr Judith Blake, LGA Housing spokesperson, claims that, “selling council homes at a discount of nearly half price [has] led to a social housing fire sale that threatens the future of the scheme.”
The rebuilding challenge
In 2016, the scheme was extended to cover Housing Association properties. The move means a further 1.5 million properties are available for tenants to buy at a discount. With so much stock at risk, stakeholders from all parties involved are seeking potential solutions to alleviate the issue.
Councils keep around 30% of their RtB income and can’t borrow to make up the shortfall and replace the sold stock. To solve the issue, the LGA argues that authorities should be able to set RtB discounts locally, keep 100% of proceeds and be free to borrow to build affordable homes – a proposal also supported by the Treasury Select Committee.
Wider solutions
Outside of local government, other solutions are being championed. At the beginning of February, Westminster allocated £866m to council-led building projects. It is proposed that this could help councils to develop housing on often-overlooked brownfield sites.
However, if councils wish to keep greater control, it may require even closer control of existing revenue sources. That means supplementing RtB income with council tax recovery, housing benefit overpayment recovery and other forms of debt enforcement. For information about how our ethical debt collection services can help, contact Dukes Bailiffs today.
