Councils unable to rebuild two third of homes sold under Right to Buy

Councils’ ability to replace homes sold under Right to Buy will be all but eliminated within five years unless there is major reform of the scheme, analysis from the Local Government Association has revealed.

The study says the current Right to Buy system only allows councils to keep a third of each Right to Buy receipt to build a replacement home and prevents local authorities from borrowing to make up the shortfall.

It also says that two-thirds of councils will have no chance of replacing homes sold off under Right to Buy on a one-for-one basis in five years’ time unless a significant restructuring of the scheme takes place.

Around 12,224 homes were sold under RTB last year and the analysis estimates that in 2023 councils would only be able to replace approximately 2,000 of these homes.

Cllr Martin Tett, LGA Housing spokesman, said: ‘We know that the Right to Buy changes lives – it helps people who otherwise wouldn’t be able to get on the ladder experience the security and independence of home-ownership. It is essential that it continues to do so.

‘However, we are now in a situation where without fundamental reform of the way the scheme is funded, this vital stepping stone into home-ownership is under threat. Councils urgently need funding to support the replacement of homes sold off under the scheme, or there’s a real chance they could be all but eliminated.

‘Without a pipeline of new homes, future generations cannot benefit from the scheme.’

The LGA said that in the last six years, more than 60,000 homes have been sold off under the scheme at a price which is, on average, half the market rate, leaving councils with enough funding to build or buy just 14,000 new homes to replace them.

They say this leaves a shortfall of 46,000 homes which could have provided secure affordable housing for key workers, victims of domestic violence, veterans, people facing homelessness, and others in desperate need of a home they can afford.

Mr Tett added: ‘Enabling all councils to borrow to build and to keep 100% of their Right to Buy receipts will be critical to delivering a renaissance in house building by councils. However, if we’re to truly make Right to Buy sustainable, we must also move towards greater flexibility on discounts locally so we can reflect local community need.

‘Councils are closest to their communities and it’s essential this money is reinvested in homes in those areas so our residents can access secure, affordable housing. This money is badly needed to deliver homes for our residents – instead of resting in an account in Whitehall, it should be sent back to where it belongs.’

A Communities and Local Government department spokesman said: ‘This Government remains committed to helping people get a foot on the housing ladder through the Right to Buy scheme.

‘We will be consulting local authorities in the coming months on ways to increase their flexibility to replace homes sold, and will announce further details in due course.’