Consultation on right to buy discount rise
Thursday, 22 December 2011 12:07 PM
Grant Shapps today announced further details of the government's planned right to buy revitalisation, including a substantial increase in the discounts social tenants can receive.
The housing minister said that by increasing the cap to £50,000 more people will be able to access the scheme, making it "meaningful" again.
An example is that if a five year tenant in London is buying a flat worth £160,000 they would receive the full £50,000 discount, compared to the previous cap of £16,000.
Someone in the West Midlands who has been a tenant for eight years on a household income of £20,000 could buy their £90,000 flat with a discount of £50,000, compared to the £26,000 for which they would previously have been eligible.
Shapps said this would help fix the "paralysed" housing market the government inherited.
He continued: "The previous miserly restrictions on discounts meant right to buy became, for many tenants, nothing more than an empty promise - a social mobility scheme run by Ebenezer Scrooge."
However Shapps also said that the UK's housing stock would need to be protected under the proposals.
"For the first time, every additional home that is sold will be replaced by a new affordable home on a one-for-one basis. The new homes for affordable rent will help get the nation building again, and help councils meet housing need," he added.
The plans are now open for consultation as the government attempts to reshape the right to buy scheme thirty years after it was first launched.
Paul Smee, Council of Mortgage Lenders director general, said: "In principle, we welcome this consultation on changes to right to buy, and support the proposal to replace on a one-for-one basis new right to buy sales with a newly built affordable home.
"It is worth noting that the Financial Services Authority's recently-published mortgage market review proposals would require advice to be given on all lending to Right to Buy borrowers, which is a significant protection that we think makes sense.
"As with all other mortgages, lenders will need to conform to all relevant regulatory requirements, reflect their own risk appetites and take account of both the borrower’s circumstances and whether the property represents adequate security, just as they do on all lending."
The UK has around two million social housing tenants, but there were fewer than 3,700 right to buy sales last year, compared to 84,000 ten years ago.
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