Following a Freedom of Information request, the BBC has discovered that millions of pounds have been spent by local authorities which have bought back properties previously sold under the government’s Right to Buy scheme.
When the scheme was introduced in October 1980 it allowed tenants of three years or more to purchase their homes with discounts ranging from 33-50 per cent, depending on how long they had lived in the property. According to government figures, by 1982 over 400,000 people had bought their council property under the scheme.
The scheme currently allows public sector tenants a discount of up to 70 per cent, although the amount is capped at £78,600 in England (or up to £104,900 in London boroughs). Housing association tenants can also now buy their homes at discounted rates. However, in areas outside England the scheme is being withdrawn, as its impact on the availability of public housing is recognised.
In an effort to meet existing housing shortages, some councils have purchased back homes previously sold at a discount. The extraordinary increase in property prices we have seen over several years means that the homes are being re-purchased at hugely inflated prices.
The released figures reveal that between 2014 and 2016, Islington Borough Council spent over £6.2m buying back 25 properties it had previously sold for nearly £1.3m. The purchasers received discounts of over £900k when they bought the properties. The buy-back isn’t just happening in London – Birmingham has agreed in its budget to re-purchase up to 200 of its previously sold Right to Buy stock.
The lack of social housing investment has been blamed by charities, and the government has already promised to build more affordable homes after recently admitting that the current housing market is ‘broken’.
The financial gains of those who have exercised their Right to Buy have been described as ‘unfair’ by Iona Bain of Young Money Blog, who argues that they had received ‘inflated profits’ after ‘benefiting from living rent free for 20-30 years’.
The housing stock sold under Right to Buy has not been replaced at the same rate it has been sold. Housing charity, Shelter, is now calling for ‘iron-clad guarantees’ to ensure that sold properties are replaced by similar replacements to ensure that affordable housing is available for future generations.