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Right to Buy risks destroying itself with £3.5bn of discounts

Right to Buy (RTB) is in the midst of a “fire sale”, which could see the scheme become untenable if the current rate of sales continues.

Councils have warned that RTB has made it difficult for them to replace housing stock because they only keep a third of the receipts.

Analysis from the LGA suggests that authorities are now selling these properties for around 43% of their values, which is up from the 25% it was at in 2011-12 but still not sufficient to fund new housebuilding projects.

The government increased the size of the discounts offered through RTB six years ago, leading to a 400% rise in sales from the policy and a total of nearly 60,000 council homes sold across the period.

The figures highlight LGA claims that councils should be able to keep more than the current 30% of receipts from sales or be allowed to borrow more than the current housing borrowing cap in order to kickstart building.

Cllr Judith Blake, the organisation’s housing spokesperson, said the government should look to the upcoming Local Government Finance Settlement to implement changes.

“Councils support people’s aspiration to own their own home and Right to Buy is one way of doing this,” Blake explained.

“However, selling council homes at a discount of nearly half price had led to a social housing fire sale that threatens the future of the scheme. The rate of homes sold under RTB combined with the restrictions on councils is making replacing homes sold virtually impossible.”

She went on to urge central government to make sure councils can replace every house sold through RTB by allowing local authorities to set their own discounts and retain more of the sales receipts.

In response, a MHCLG spokesman said: “Right to Buy is giving people who aspire to own their home the opportunity to do so, and more than 80,000 households have used the scheme since it was reinvigorated in 2012.

“Every additional home sold off must be replaced by an extra one, nationally. Councils should deliver these properties within three years.”

Chancellor Philip Hammond announced in last year’s Autumn Budget that the current Conservative government would be aiming to build around 300,000 new homes a year by the end of its term.

Top image: Oktay Ortakcioglu

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