The prime minister will today formally unveil the new right to buy scheme for social housing tenants which will include an increased discount cap of £75,000.
The government is pledging that all homes sold under the reinvigorated right to buy will be replaced by a new home for affordable rent, with receipts from sales used towards the cost of the replacement.
Councils will only be able to keep additional receipts from sales if they sign up to an agreement with government that they will limit the use of those receipts to 30 per cent of the cost of the replacement homes. They will be expected to secure the remainder of the funding from other sources. If they do not wish to do so then the right to buy receipts will be placed in a central pot to support house building nationally.
Right to buy was launched in 1980 with discount rates set at between 35 and 50 per cent, and capped at £25,000. This was increased to £50,000 in 1989, but has been cut in recent years following the introduction of regional limits, leading to a decline in the popularity of the scheme.
David Cameron is expected to say that the discounts became ‘virtually meaningless’ in recent times and that he wants to see a new wave of homeownership in Britain.
At a launch in London, Mr Cameron will say: ‘I want many more people to achieve the dream of homeownership. In the 1980s, right to buy helped millions of people living in council housing achieve their aspiration of owning their own home.
‘It gave something back to families who worked hard, paid their rent and played by the rules. It allowed them to do up their home, change their front door, improve their garden – without getting permission from the council.
‘It gave people a sense of pride and ownership not just in their home, but in their street and neighbourhood, helping to build strong families and stable mixed communities.’
Under the new right to buy, local authorities will be able to cover some of the cost of withdrawn applications. In London, councils can retain £2,850 while those in the rest of the country can retain £1,300 to cover the costs of administration on each sale.
Around two million homes have been bought under the right to buy since the policy was introduced in the 1980s. The impact assessment for the reinvigorated right to buy, published in December last year, suggested around 300,000 households might be in a position to take advantage of the new discounts.