David Baybut, Head of Real Estate at the national law firm Stephensons shares insight into the government’s Right to Buy scheme
I was shocked to hear recently that local government has spent millions of pounds buying back properties sold at a discount under Right to Buy legislation.
The BBC revealed that some local councils were buying back homes they’d previously sold in order to help them tackle housing shortages.
Their story reported that Islington Council, in north London, had spent more than £6.2m buying back homes it had sold to people for a total of less than £1.3m.
One property in Islington sold for £17,600 in 2004, at a discount of £26,400, was apparently bought back for £176,750 some 11 years later. House prices in the area had rocketed in the intervening period.
Meanwhile in the North of England, the BBC reported, Wakefield Council had spent more than £2.5m on 35 homes it had previously sold for close to £1m under Right to Buy schemes.
Failure to replenish stock
Of course the original Right to Buy scheme, introduced by the government in the 1980’s, allowed council house tenants – and later social housing tenants – to buy their homes at a discount.
At the time, there were many unanswered questions surrounding the replacement of homes sold. What kind of homes? To what time scale? How many? Where?
In 2015, the National Housing Federation estimated that only 46 per cent of properties sold under the Right to Buy scheme were being replaced. Some have put that figure as low as 12 per cent since the scheme was opened to housing association tenants.
And it still seems that there is little clarity on the matter and providers are still unable to meet the ‘like-for-like’ criteria.
It will come as no great surprise to anyone in the sector that councils are having to buy back these properties – but the amounts of money involved are truly staggering. This is money from the public purse which could have been used to fund new homes but, instead, is going into homeowners’ pockets.
While nobody would doubt the good intentions behind the scheme to promote home ownership, its execution is clearly still not working in all areas of the country and leaves fewer properties for those who really need them.
David Baybut
Head of Real Estate
Stephensons
https://www.stephensons.co.uk/
