Right To Buy is unsustainable without new homes, say councils

Right To Buy is unsustainable without local councils being given the right to set discounts for their areas and replacing every home sold with a new one.

The warning has come from the Local Government Association, which represents 370 councils in England and Wales. 

It says that since the government increased the size of the discounts available in April 2012, the average discount has increased by 132 per cent to more than £60,000 – effectively selling properties at almost half price.

Councils are warning that this has led to a quadrupling in the number of RTB sales, which they have been unable to keep up with and replace.

The current Right To Buy system only allows councils to keep a third of each RTB receipt to build a replacement home and prevents local authorities from borrowing to make up the shortfall.

As a result, the LGA says councils have only been able to replace around a fifth of homes sold since 2012, impacting on their ability to provide housing for homeless and vulnerable families.

The association’s analysis also reveals:

- in 2011/12, the average discount for a council tenant purchasing under RTB was £26,690 – around 25 per cent of average property value – rising to £61,810 or 43 per cent in 2016/17;

- over the same period, councils have reported a 409 per cent rise in RTB sales, from 2,638 in 2011/12 to 13,416 in 2016/17. This has amounted to a total of nearly 58,000 council homes sold under RTB in six years.  

The LGA says that for RTB to work for future generations, councils must be permitted to set discounts locally and keep 100 per cent of sale receipts to replace homes.

Council leaders are also urging the government to accept the calls of both the LGA and the cross-party Treasury Select Committee, and completely scrap the cap on the amount councils can borrow to invest in new and existing homes.