£75,000 discounts will help get tenants across the threshold A new generation of social tenants were today handed the keys to homeownership…
£75,000 discounts will help get tenants across the threshold
A new generation of social tenants were today handed the keys to homeownership, as the Prime Minister and Housing Minister Grant Shapps launched a reinvigorated Right to Buy.
The Prime Minister today gave the green light to offer 2.5 million tenants the opportunity to buy their home with dramatically increased discounts.
Today’s move will reverse years of declining discounts for tenants, which made Right to Buy meaningless in many parts of the country. Fewer than 3,700 sales were made last year compared to a peak of 84,000 less than 10 years ago.
Tenants informed of new opportunities
Ministers are taking every effort to ensure tenants have the information they need to understand how today’s changes could put them in the frame to become homeowners. To help councils fulfil their legal duty to inform tenants, the Government is making a range of materials available to ensure potential buyers are aware of the changes and understand the steps they should take if they decide Right to Buy is the right choice for them.
The Government has moved swiftly to introduce the new discounts, and councils should waste no time getting in touch with their tenants, so as many as possible can take advantage of the scheme and use the discount as a firm foundation for home ownership.
Sold homes replaced with new affordable properties
For the first time, the additional homes sold under the revamped scheme will be replaced by new properties for affordable rent, ensuring there is no reduction in the number of affordable homes.
Councils will be able to sign an agreement with Government for using the receipts from sales to build new affordable homes in their area. The receipts will be expected to meet up to 30 per cent of the costs, mirroring the highly successful funding model used for the Affordable Homes Programme, which has exceeded all expectations and will deliver up to 170,000 new affordable homes by 2015.
Prime Minister David Cameron said:
I want many more people to achieve the dream of home ownership. In the 80s, Right to Buy helped millions of people living in council housing achieve their aspiration of owning their own home.
“It gave something back to families who worked hard, paid their rent and played by the rules. It allowed them to do up their home, change their front door, improve their garden - without getting permission from the council. It gave people a sense of pride and ownership not just in their home, but in their street and neighbourhood, helping to build strong families and stable mixed communities.
“But over time the discounts were cut, they didn’t keep pace with rises in property prices, and this vital rung on the property ladder was all but removed. This Government is now putting it back by dramatically increasing the discount rates so that we support the dreams of those council tenants who to want to own the roof over their head.”
Housing Minister Grant Shapps said:
This country was built on aspiration: men and women who looked to the future and resolved to make a better life for themselves and their families. But years of punitive limitations on the level of discounts under Right to Buy have sabotaged the aspirations of hardworking council tenants who want to take their first step on the property ladder.
This Government wants to help everyone achieve their aspirations - so I’m delighted to announce that from today these miserly restrictions on discounts are history, and tenants will once again receive genuine assistance to feel the pride of home ownership.
Tenants who have done well for themselves and want to get across the threshold to home ownership can now expect a discount of up to £75,000 to help them buy the home they live in. Councils must ensure that their tenants are kept properly informed of the new opportunities, and offer a helping hand to those tenants who want to buy their property.
We are also determined to maintain the number of affordable homes for rent and get Britain building again. So for the first time, additional properties that are sold will be replaced by new affordable homes, using the same highly successful model that is already delivering thousands of new affordable homes in every part of the country.
Bigger cash discounts to benefit every part of the country
Thirty years after the original launch of Right to Buy, Ministers believe it can once again promote opportunity and boost social mobility for the nation’s social tenants, and at the same time transform housing estates.
From today tenants could benefit from a discount of up to £75,000, depending on how long they have been a tenant.This will mean, for example, that:
- someone in Birmingham who had been a tenant for fifteen years could buy their £90,000 flat with a discount of £63,000 compared to £26,000 previously - almost trebling their discount; and
- in London, a tenant for five years buying a flat worth £160,000 would receive a discount of £75,000 - more than four times the previous cap of £16,000.
This enhanced offer includes the half a million Housing Association tenants with a Preserved Right to Buy - because their home was part of a housing stock transfer from a local authority.
Where receipts are not used locally to build new homes they will be passed to the Greater London Authority and the Homes and Communities Agency, who will re-invest the money in new affordable housing across the country.
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Notes to editors
1. The revitalised Right to Buy scheme will give tenants a larger discount on the market value of their home. The longer they have been a tenant, the bigger discount they get, up to a maximum cap of £75,000.
2. For a house, tenants can get a discount of 35 per cent on their current home after five years as a public sector tenant. For each extra year, they get an additional 1 per cent discount up to a maximum of 60 per cent.
3. For flats, tenants can get a discount of 50 per cent, after a five-year tenancy. For each extra year, they get an additional 2 per cent discount up to a maximum of 70 per cent.
4. Whatever percentage they are eligible for, it cannot exceed £75,000. This arrangement will result in far higher potential discounts for tenants across the country - see table below for previous discount limits.
5. Tenants must have been public sector tenants for five years before they can qualify to purchase their home through Right to Buy. This tenancy can be in their current home or in a previous one, with a different landlord.
6. The replacement of additional homes bought through Right to Buy will be funded using the same highly successful model as the Affordable Homes programme. Under this approach social landlords can meet the costs of new homes from borrowing against the future rental income, contributing from their own resources, including land, and grant funding from the Government. For the Right to Buy replacement scheme, receipts will substitute for grant funding for up to 30 per cent of total costs.
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