16/03/2012 | By Gavriel Hollander
Councils could receive as little as £5,000 per home sold under right to buy reforms, thanks to huge discounts announced this week.
Earlier this week, the Communities and Local Government department
revealed that the maximum discount available to council tenants who wanted to buy their homes would be raised to £75,000, rather than £50,000 as had been widely expected.
However, the percentage of discounts available have remained the same, meaning tenants can get up to 70 per cent off the price of their homes.
‘The problem with the discount is that, in the north, it gives a selling price of £20,000 to £30,000 for a lot of homes,’ said Steve Partridge, director of financial policy at the Chartered Institute of Housing. ‘We are just giving them away at a time when we are asking local authorities to make the best use of their assets.’
Receipts from right to buy sales will be used by councils to help fund the building of one-for-one replacements. But with the Treasury claiming 75 per cent of the cash generated from sales, this could lead to homes being worth as little as £5,000 to councils – leading to fears they won’t be able to replace stock.
The CIH has previously called for variable discount rates across the country, depending on house prices, to ensure that sales generated sufficient receipts to allow councils to build replacement homes.
Grainia Long, chief executive of the CIH, said she was ‘still not convinced’ that right to buy would deliver these replacements. The Local Government Association’s Labour group called right to buy ‘a fire sale of community assets’.
‘The country is desperately short of social housing,’ said Tony Newman, the group’s housing spokesperson. ‘Instead of addressing the problem, the government is proposing to sell off valuable social homes at a discount.’
A spokesperson for the CLG acknowledged that receipts would not be enough to deliver replacement homes in some areas but said that the one-for-one target was a national one.