There has been a lot of comment about the Government’s decision to make the right to buy scheme more attractive by increasing the discounts available. The scheme was introduced in 1980 and is open to qualifying social tenants in England. Secure tenants of local authorities and non-charitable housing associations can buy their homes once they have been tenants for a qualifying period of five years.
Landlord insurance clients are sometimes worried that their long terms tenants may acquire a right to buy but this scheme only applies to social housing. The discount available increases with the length of the tenancy. For houses the discount is 35% of the value plus 1 percent for every year beyond the qualifying period up to a maximum of 60%. For flats the discount starts at 50% and rises by 2% a year up to a maximum of 70%. There is cap on the total discount and the Government decided to increase it to £75,000 from the 2nd April. Previously the discount varied from region to region and was as low as £16,000 in some areas. The Government believes that this was in part responsible for a decline in sales under the right to buy scheme because it had not kept pace with rising property values.
The money raised from right to buy sales is intended to be used to fund replacement new homes to be made available at affordable rents. Councils will be able to sign up with the Government to use the cash to build social housing.