The Right to Buy Scheme, allows council tenants in England to purchase their council homes at a discounted price than the full market price. This is due to the duration you have spent as a tenant meaning you are eligible for a discount. A staggering 2 million homes have been sold to tenants under the Right to Buy Scheme since it was introduced in the 1980s.

However, homes that are sold under this scheme are in need of a replacement and there is a limited supply of durable homes which means that it would not meet the demand of the 1.3 million people waiting for social housing. Not only this, many homes have been sold as well as re-let without ensuring it is in good quality. With this in mind, the government are now determined to meet the housing need by increasing housebuilding, in hopes of benefitting the taxpayer.

What are the proposed changes?

Some of the key areas of focus are:

• Discounts available to the tenants
• Eligibility
• Newly built and refurbished social housing

Discounts available to the tenants

The current rule on discounts, which was introduced in 1980, establishes how much percentage discount the tenant was entitled to. This percentage then increased as each year of the tenancy went by. For those with houses, tenants receive a 35% discount off of the property value if they lived in the public sector tenant between 3 and 5 years. After these 5 years, the discount increases by 2% for every year they have been a tenant. Tenants living in flats enjoy an increased discount of 50% off of the property value if they have been a public sector tenant between 3 and 5 years. Similar to tenants with houses, after these 5 years, the discount increases by 2% for every year they have been a tenants. A maximum cash discount was also introduced when this scheme started, however the government are looking to bring down these discounts due to the increase in 2012. To bring these discounts down, the government have worked out new figures that better align with their purposes. The table of figures can be accessed using the link below:

Eligibility

Currently, in order to purchase their council home under this scheme the tenant must be a secure tenant and mush have spent 3 years as a public sector tenant. In order to deliver a fair scheme, the government do not feel satisfied with the 3-year mark because the amount of rent paid in this time would not be equal to the discount that is available to them. The number of years before someone can be deemed as a secure tenant has not yet been decided.

Newly built and refurbished social housing

When it comes to newly built homes, the council may be reluctant to build new homes because the property can be sold at a lesser price than the construction cost, due to the discount. As a direct consequence of this, the quality of the houses may not be of good standard. The government aim to reduce this worry amongst councils by increasing the cost floor period from 15 to 30 years. Essentially, this means that councils are offered financial protection to ensure that the discount will not undermine the time spent repairing and rebuilding the new social home. This will motivate councils to build new homes as they are ensured the discounted price will not sell the home for less than the cost taken to rebuild new social homes.

What does this mean for tenants?

For tenants purchasing their social home under the Right to Buy scheme, these proposed changes can be beneficial to them in terms of a stronger and sturdier home that equates to the money spent purchasing their home. Although the discounts are being reviewed, with some potentially benefitting more than others, it helps with the overall goal of providing a more stable path to owning a home. Looking at the bigger picture, this means you can avoid rising rent prices and instead have an increased sense of security that comes with owning a home.

For more information on the reforms to the Right to Buy Scheme, please click the link below: