Fears over viability of 'reinvigorated' Right to buy scheme

The new Right to Buy scheme includes a discount cap of up to £75,000 and the Government has pledged to replace every home sold under the scheme with a new affordable rent home to "support tenants and help build more affordable housing". 

The Government's own research makes it clear that the money generated locally by Right to Buy sales will not always secure a replacement home in each area, the Chartered Institute of Housing (CIH) said. 

The receipts from the sale of a Right to Buy home can be recycled by the council to acquire a new affordable rent home. Councils will also be able to buy back former council properties under the new rules and can claim around 50% of the costs from their total Right to Buy receipts. 

Many industry experts have called on the Government to adopt a system that reflects the value of the properties being bought, especially those in rural locations.

The Government should have "considered carefully" the impact of right to buy take-up on rural areas. The CIH has warned that the current model could "exacerbate the significant shortage of properties in villages" and that changes to the main policy may be needed.

"With 4.5 million people on waiting lists, it is crucial the scheme replaces the homes sold, one-for-one, as soon as possible. Otherwise we’ll never get to grips with England’s housing crisis," the National Housing Federation (NHF) said.

The Government should provide a system of caps that reflect local variations in house prices, and introduce a fixed time period within which Right to Buy receipts must be reinvested in new homes, the NHF said.

Under the new Right to Buy model it is expected that  that there will be 100,000 sales by 2019, the Government said. The current annual Right to Buy sales amount to less than 3,000.

"One of the biggest concerns raised by members is around the criteria which would be put on the replacement – in rural areas, replacement properties might end up being in, say, the nearest market town rather than in the village where the original property was sold," the CIH said.

In addition to concerns raised over the policy wording of the Government's model, property research firm Hometrack has raised concerns over lending.

"Only a 'small proportion' of tenants will be able to obtain a mortgage given that fewer than 20 per cent of council tenants are in full-time employment," according to Richard Donnell, head of research at Hometrack.