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Conservative manifesto to extend Right to Buy scheme for housing association families

David Cameron is to allow 1.3 million families the dream of owning their own home by extending the Right to Buy scheme first started in the 1980s.



The Conservative manifesto pledge could see up to 1.3 million families that have been living in their family association homes for three years or more to buy their own homes.

Of these families 800,000 housing association tenants can already buy their own homes although the discounts are quite low rising from £9,000 to £16,000 in London. This would also include 500,000 tenants that current do not have a right to buy.

Councils would also be expected to sell their most valuable properties and the government expects £1 billion from the sale could be used to build 400,000 new build homes on brownfield sites.

More new-build homes would give first time buyers and home movers more availability to buy a suitable property.

How will the scheme work?

The manifesto pledge extends the existing Right to Buy legislation in 2012 which reduced the rental period required for a tenant to buy their property from five years to three years and increased the discount. This resulted in a rise of sales from 2,500 to 11,000 each year.

A tenant must have lived in their housing association property for three years before they can apply for the Right to Buy scheme.

Right to Buy would offer tenants the opportunity to become first time buyers with large discounts capped at £102,700 in London and £77,000 for the rest of England.

The discount for a house would be 35% of the market price and for flats this would be 50% and capped in terms of cash.

Discounts would be greater the longer the tenant has lived in the property. For a house for every additional year you will receive an extra 1% discount and for a flat for one more year you would receive an extra 2% discount.

Even with the discount the tenant would need to be able to afford a mortgage. A property in London with a market value of £400,000 could use the £102,700 cap and would need to raise £297,300 with a deposit and mortgage.

Funding new build homes

To fund the discount for housing associations which would cost £5.8 billion, the government would require local councils to sell 5% of their remaining stock of most valuable properties.

These homes would be sold when they became vacant and the government expects to sell 15,000 of the most valuable homes each year raising £4.5 billion.

Cash from the sales will be used to fund the discount and £1 billion over the next five years used to for 400,000 new build homes on brownfield sites for first time buyers.

Competition from buy-to-let investors and reduced supply of suitable properties means first time buyers must continue renting and saving for a bigger deposit.

The lack of new-build homes could mean remortgage buyers staying where they are and continue saving more for a bigger deposit.

Help with the deposit for a new home can come from family members as the equity release buyer can access cash using a lifetime mortgage and give to a child or grandchild.

The Conservatives say for each housing association house sold a new house will be made available. However, the National Housing Federation (NHF) reveals since 2012 only 46% of homes sold under Right to Buy have been replaced.

So far under the Right to Buy scheme started in the 1980s 1.88 million council houses in England have been sold or 37% of housing stock compared to only 345,000 new homes.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even gift to a family member or friend.

Learn more by using the property value tracker chart, mortgage cost calculator and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.


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