Total right to buy discounts have climbed to £1 billion a year – leading to a net loss of some £300 million, according to recent analysis from the Chartered Institute of Housing (CIH).
Cutting the discounts available could lead to an extra 12,000 homes being built a year, CIH has calculated. But the organisation says right to buy should be suspended altogether to stem the loss of social rented homes.
The extent of the cost to the public sector is revealed in the UK Housing Review 2018 Autumn briefing paper, launched earlier this month at Sheffield Town Hall.
Right to buy discounts were increased to £80,000 – and £108,000 in London – in April 2012. Since then 69,467 homes have been sold while only 18,958 have been started or acquired to replace them.
CIH chief executive Terrie Alafat CBE commented “Not only are we failing to build enough new homes for social rent, we are losing them at a time when we need them more than ever. Our research shows that we lost more than 150,000 social rented homes between 2012 and 2017 due to right to buy and other factors, and that figure will reach 230,000 by 2020 unless we take action now.
“This new research reveals just how much right to buy is costing the public sector every year. Suspending the scheme means the government could invest the savings in more homes for social rent – which is often the only truly affordable option for people on lower incomes – and also in fairer and more cost-effective ways to help tenants access home ownership.
“We support the principle of helping tenants move into home ownership but it cannot be at the expense of other people in need. About two-thirds of the discount that a tenant who buys their home now receives is justified because they are sitting tenants paying sub-market rent. But one-third is an excessive discount, which if clawed back, would lead to more money coming to councils to build new homes.
“We know that the government is consulting on ways to make it easier for councils to replace the homes they sell under right to buy, which is welcome – but we still believe ministers should suspend the scheme to stem the loss of social rented homes and look at more effective ways to help people access home ownership.”