Many in council subsidised accommodation are trapped paying rent to the state due to current prices in the UK’s cities. High prices mean, even with the current Right to Buy discount, that many mortgages are out of reach for those in these homes. Today we call for a reboot of Help to Buy: by making it flexible.
UK has the second-largest social housing sector in the EU, and over half of tenants in the sector want to own their own home.
The Right to Buy works for some, but some social tenants live in expensive properties which they cannot afford to buy.
Almost 700,000 local authority owned homes are in areas where median house prices exceed £250,000. Over 200,000 of these are in areas where median house prices exceed £500,000.
Social tenants eligible for the Right to Buy should be given a Flexible Right to Buy, entitling them to buy a new home, using the value of their Right to Buy discount.
The tenant’s previous home would then be sold, funding the discount and raising additional revenue.
A conservative estimate of the impact would see 21,000 tenants take advantage of the scheme with £2 billion of discounts on £9 billion of stock and net receipts of £7 billion.
An ambitious estimate of the impact would see 197,000 tenants benefit, with £83 billion of stock and £21 billion of discounts and net receipts of £62 billion.
Housing stock would be better matched to people’s circumstances, with a cooling effect on overheated local markets.
Some friction would be removed from labour markets, resulting in improved productivity and wages.