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Are we heading to a social housing crisis?

Posted by
05 Feb 2015

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

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

In January 2014 the government announced that the maximumdiscount 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 ofinflation. The view of this was to increase home ownership in the UK.

Successful Impact?

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

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

Anothercontroversial matter is that local authorities are now looking to redevelop oldestates where tenants have bought under the Right to Buy scheme. Local authoritiesare sending out Compulsory Purchase Orders to these tenants to reclaim thehouses 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.


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