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Are we heading to a social housing crisis?

by Chelsey Newsom | 5 February 2015

The Right to Buy scheme was introduced in the Housing Act 1980 as one of the first major reforms introduced by the Thatcher government. When this was first introduced, it was a very controversial matter. The Right to Buy scheme gives eligible people who live in council properties the right to buy their homes at a discounted price. The Scheme is available to secure tenants who have spent the past 5 years as a tenant within the public sector.

October 2011 saw implementation of increasing caps on Right to Buy discounts to encourage tenant to exercise their Right to Buy. April 2012 then saw a major change to Right to Buy, with the maximum discount that buyers can get on the market value of their home was £75,000.

In January 2014 the government announced that the maximum discount for a house will increase from 60% to 70% of its value; and the £75,000 cap will start increasing in line with the consumer price index rate of inflation. The view of this was to increase home ownership in the UK.

Successful Impact?

The Right to Buy scheme has impacted local authority legal teams. In the past year, Sellick Partnership has seen a 30% increase in property roles throughout the UK with a specific Right to Buy focus.

Local authorities are under increasing pressure to reduce their spending and recover income.The Right to Buy scheme has been extremely controversial,with local authorities now struggling to find temporary accommodation for their tenants due to a shortage of housing. Harrow Council was reported to be renting back their properties that they had previously owned. This is argued that councils have been forced to put tenants in houses that they have already sold.

Another controversial matter is that local authorities are now looking to redevelop old estates where tenants have bought under the Right to Buy scheme. Local authorities are sending out Compulsory Purchase Orders to these tenants to reclaim the houses back. They are of course legally bound to pay back the funds.

It goes without saying that the Right to Buyschemes has it's advantages and its disadvantages, but the question lies inwhether the Right to Buy scheme will continue as it doesn't seem as stable assome might think.

What do you think?  Are we heading towards a crisis with Right to Buy? Let us know your thoughts below.