Right to Buy sales and replacements – England

The Housing Act of the 1980s granted social tenants of local authorities or private registered providers the right to buy their rented homes at a discount through the creation of the Right to Buy Scheme.  The scheme is open to secure tenants with a minimum of 3 years tenancy (which was decreased from 5 years in 2018).  The aim of the scheme is that for every additional property sold through the right to buy will be replaced by a new affordable home for rent under the government’s one-for-one replacement policy.

It’s interesting to note that the ability to sell council houses to tenants has been available to local authorities since the Housing Act 1936.  However, it wasn’t until the early 1970s that sales started to increase, with over 45,000 council houses sold in 1972 alone. By 1987, more than 1,000,000 council houses in the UK had been sold to their tenants.  In an effort to reduce the maximum discounts for the right to buy, the government introduced Discount Orders in 1998 and 2003, which significantly decreased sales. Previously, the discount cap had been £50,000 across all regions of the UK, but this change saw discounts range between £16,000 and £38,000 depending on the location of the property.

In April 2012, the Department for Communities and Local Government made some changes to the right to buy scheme. The maximum discount was increased to £75,000 across England and £100,000 in London, and it was further increased annually in line with the Consumer Prices Index rate of inflation from 2014.  They also extended the time local authorities have to spend new and existing Right to Buy receipts from 3 years to 5 years, increased the percentage cost of a new home that local authorities can fund using Right to Buy receipts from 30% to 40% and introduced a 50% cap on the use of Right to Buy receipts for acquisitions to help drive new supply of properties with effect from 1 April 2022 (phased in over 2022-23 to 2024-25).  Receipts can now be used for shared ownership and first homes, as well as housing at affordable and social rent.

Between the years 1980 and 31 March 2023, more than 2 million sales were made to tenants through the Right to Buy scheme. In the year 2022-23, local authorities reported 10,896 eligible sales, which is similar to the previous year.  Out of the 10,896 eligible, most of them were Right to Buy sales, with only a small number being shared ownership or other eligible sales.

Local authorities received £1,108 million from these sales, with an average receipt per dwelling of £101,713, which is a 3% increase compared to the previous year.

In 2022-23, there were 3,447 replacement properties funded through receipts from eligible sales. This represents a 33% decrease compared to the previous year and a 46% decrease compared to 2020-21.  The majority of these replacements were initiated or acquired by local authorities, with 3,200 properties falling under their responsibility.  Homes England or the Greater London Authority played a smaller role, starting or acquiring a total of 247 properties.  While this decrease is significant, it is important to note that the number of eligible sales was also impacted by changes to the Right to Buy scheme.

In March 2023, it was announced that councils will be able to retain 100% of the receipts from right to buy sales in 2022-23 and 2023-24 to help deliver more replacement homes.

It has been fascinating to delve into the history of the Right to Buy scheme and how it has evolved over time. The changes that have been implemented have certainly affected the number of sales and replacements funded through receipts. It is encouraging to see that the scheme has been closely monitored to assess its effectiveness, and hopefully it will continue to be a valuable tool for those seeking to purchase their own homes.

Blog Author:
Nicola Garrett