Research casts doubt on right to buy goals
Friday, 23 December 2011 10:55 AM
Two thirds of council tenants could afford the right to buy with the proposed new discount of £50,000 – but with only 16 per cent of them in full-time employment few will be eligible for a mortgage.
That is the analysis from market analytics company Hometrack in the wake of a new government consultation on the housing policy.
The findings show that the national average discount required for tenants to buy is 40 per cent or £50,800, significantly higher than the current average of 25 per cent.
However, in London the discount required to make right to buy affordable is 58 per cent of £128,000 and in the South East it is £75,000.
The government claims that the new policy will deliver one for one replacement of rented homes as the proceeds are reinvested.
However, Hometrack says the average capital raised per sale of £64,725 would be much lower than the cost of delivering a new property and less than the current average receipt of £77,470. Delivering one new home would require 1.4 sales.
Richard Donnell, director of research at Hometrack, said: "The £50,000 cap means that take-up is more likely to be in the most affordable areas of the country with a lower level of receipt per sale than currently.
"With lower levels of capital receipt per sale, the ability to achieve a one-for-one replacement rate may be difficult. Extra subsidy in the form of development on low cost public land may have to play a vital role if this policy objective is to be met."
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