On 21 November, the Ministry of
Housing, Communities and Local Government (MHCLG) launched a
consultation on reforming the Right to Buy scheme. This follows
action announced in the Autumn Budget to return the maximum
discounts available to purchasers to their pre-2012 levels. These
changes have now come into effect, and the cost floor protection
period has been increased from 15 to 30 years. Additionally, the
Budget announced that councils will no longer be required to return
a proportion of receipts from Right to Buy (RTB) sales to the
Treasury.
The Government is now consulting on broader
reforms "necessary to further support the government's objective of
achieving a sustainable and fair Right to Buy scheme."
1. Eligibility
The consultation proposes increasing the eligibility
requirement, which is currently three years as a secure tenant.
Views are sought on whether this should be extended to five, ten,
or more than ten years. Additionally, views are sought on other
reforms that could deliver a fairer and more sustainable
scheme.
2. Discounts as a percentage of the property
value
Discounts currently range from 35% to 70% of
the property value for houses, and from 50% to 75% for flats. The
discount increases by 1% for each additional year of eligible
tenancy until the maximum is reached. The consultation paper
proposes to remove the different treatment of houses and flats and
reduce both the minimum and maximum percentage discounts. It
proposes that the discount will continue to increase by 1% for each
additional year of eligibility. Views are invited on reducing the
minimum discount to between 0% and 5%, and the maximum discount to
between 5% and 20%. The consultation paper also asks whether
maximum discounts specified in cash terms should be retained or
whether they would be made unnecessary by the amendment of the
maximum percentage discounts.
3. Exemptions
The consultation seeks views on whether the current exemptions
to the scheme are fit for purpose and whether new-build homes
should be exempt from the Right to Buy for a specified period to
better incentivise councils to invest in new stock. It also
welcomes views on how to protect council investments in
retrofitting and improving homes to a high standard.
4. Restrictions on properties after
sale
Concerns have been raised about too many homes sold under the
Right to Buy being let out. The Government does not propose
introducing covenants to prevent homes from being let out, citing
that such measures would be too restrictive and too difficult for
councils to administer. Similarly, it does not propose requiring
sold homes to be resold at a discount in perpetuity, as it believes
the complexity of this approach would likely outweigh its benefits.
However, the consultation seeks views on whether the time period
during which councils can require repayment of all or part of the
discount received should be increased from 5 to 10 years.
5. Requirements around the replacement of
homes sold under the Right to Buy
The consultation seeks views on whether replacement homes should
be exclusively for social rent, whether replacements should, as far
as possible, match the same size and location of the homes sold,
and whether there should be a target to replace all future Right to
Buy sales on a one-for-one basis.
6. Simplification of the receipts
regime
Views are sought on how the current system, in which the capital
receipt generated from the sale of a home is divided into six parts
(after funding the discount), can be simplified and strengthened to
better support the replacement of homes.
The consultation paper also confirms that the Government no
longer plans to extend the Right to Buy to those housing
association tenants who do not already have it.
The consultation closes on 15 January.