House of Commons Library

Incentivising the Right to Buy

Published Monday, June 23, 2014

In October 2011 the Prime Minister said he wanted to “raise Right to Buy discounts to a level which will make the scheme attractive again and rejuvenate the housing stock.” This note summarises various changes to the Right to Buy (RTB) in England and reactions to those changes.

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In October 2011 the Prime Minister said he wanted to “raise Right to Buy discounts to a level which will make the scheme attractive again and rejuvenate the housing stock.” This note summarises various changes to the Right to Buy (RTB) in England and reactions to those changes.

With effect from 2 April 2012 the Government increased the maximum cap on the Right to Buy discount to £75,000. This change was implemented by the Housing (Right to Buy) (Limit on Discount) (England) Order 2012 (SI 2012/734). DCLG published guidance on the changes for local authorities, Reinvigorating the Right to Buy and one for one replacement: information for local authorities. The Government anticipated that some 20,000 additional Right to Buy sales would take place over the following 3 years as a result of the restoration and increase in the national maximum discount cap.

As part of Budget 2013 the Chancellor announced that the maximum discount in London would rise to £100,000 with effect from 25 March 2013. This was introduced by the Housing (Right to Buy) (Limit on Discount) (England) Order 2013 (SI 2013/677). Measures have been included in the Deregulation Bill 2013-14 (carried forward to the current session) to reduce the qualifying period for the Right to Buy from five to three years.

The Autumn Statement 2013 saw the Chancellor announce an intention to appoint RTB ‘Agents’ to “help buyers complete their home purchase” and “provide £100 million to establish a fund to increase Right to Buy sales, by improving applicants’ access to mortgage finance.”

On 3 January 2014 the Secretary of State, Eric Pickles, announced an intention to increase the maximum discount on a house under the RTB from 60% to 70% of its value, together with an intention to increase the discount caps on an annual basis by the Consumer Price Index. A draft SI, the Housing (Right to Buy) (Maximum Percentage Discount) (England) Order 2014 has been published. This draft SI contains provisions which will, in due course, increase the maximum discount in respect of a house to 70%. The Housing (Right to Buy) (Limit on Discount) (England) Order 2014 (SI 2014/1378) will increase the maximum discounts (currently £75,000 and £100,000 in London) from 21 July 2014 and provides for annual increases by CPI from April 2015.

Background on the RTB and previous reforms can be found in Library Research Paper 99/36, The Right to Buy and Library Note SN/SP/1983. Note that most tenants of housing associations do not have the Right to Buy – see Library note Housing association tenants: right to buy SN/SP/648.

Commons Briefing papers SN06251

Author: Wendy Wilson

Topics: Housing, Owner occupation, Social rented housing

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