£5bn national discounts threatening RTB future

New analysis has claimed that tenants have received discounts of nearly £5 billion to help purchase their council home under the Right to Buy (RTB) scheme since the size of the discount was increased in April 2012.

The national RTB discount, set by government, currently averages 42 per cent of market value, meaning council properties can be bought for almost half price. Since the Government increased the size of the RTB discount in April 2012, the average discount on a property has increased by 137 per cent to more than £63,000.

The Local Government Association is now arguing that the scheme faces an uncertain future unless councils are given the flexibility to set discounts locally and retain 100 per cent of sales receipts to fund the replacement of homes sold off under the scheme. As a result of the discount increase, the LGA estimates that tenants have benefited from £4.9 billion in Right to Buy discounts in order to buy their own home.

Between 2012/13 and 2018/19, 79,119 homes have been sold under the RTB scheme. With councils only able to use a third of each retained RTB receipt to build a replacement home, they have only been able to replace 21,720 of these homes sold in the same period. This loss of social rented housing risks pushing more families into the private rented sector, driving up housing benefit spending and rents and exacerbating our homelessness crisis.

David Renard, the LGA’s housing spokesman, said: “Right to Buy continues to enable many families to achieve the dream of getting on the housing ladder and owning their own home. Without reform of the scheme, future generations will not enjoy the same opportunity. It is wrong for the same level of discount to be applied all over the country. Local housing markets differ enormously and this national discount is impacting on different areas of the country in different ways.

“Given the government’s commitment to level up powers and investment in local areas across all parts of the country, we would want to see the flexibility for councils to be able to set discounts for their local area. The size of discount is also driving a surge in homes being sold under RTB, which councils are unable to keep up with and replace with new homes for those who desperately need them.

“This is aggravating the housing crisis by further reducing the social housing available to councils to support vulnerable people and their families and reduce homelessness. It is vital that councils can set their own RTB discounts depending on the circumstances of their local area and housing markets. Councils must also be able to keep 100 per cent of sales receipts, be permitted to use all of it to replace homes sold, as well as have the ability to combine receipts with government grant.”