The Return of Right to Buy

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Portrait Of Excited Young Woman Standing Outside New Home Holding Keys

The prime minister of the United Kingdom, Boris Johnson is expected to confirm plans to extend the Right to Buy to housing association tenants today.

Boris Johnson will annouce this at a speech in Lancashire today on measures to help millions onto the property ladder.

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UK Prime Minister Boris Johnson” by leafar. is licensed under CC BY-SA 2.0.

Report shows that this opportunity would be made available to renters to acquire social properties at discounts of up to 70%, although is expected to be restricted to a series of pilots initially.

Concerns among analysts is that the Right to Buy extension might erode supply of affordable homes, however the policy has been welcomed by the Center for Policy Studies.

A Centre for Policy Studies paper released today explains the Right to Buy as one of the biggest policy successes of the 20th century. The fact that almost 10% of households covering roughtly 4.5 million people used this mode to move into home ownership. This policy also appears to straighten to a certain extent the scale of discrimination with the benefit system against low-income owners as opposed to working renters.

Alex Morton, a former Number 10 housing advisor wrote in the new paper that Right to Buy led to a reduction in waiting lists for social housing. His argument is also that this policy delivers long-term savings of about £140,000 for the Treasury per house sold. The savings is largely due to the reduced cost of housing benefits when someone becomes an owner.

A fundamental bias towards keeping people as tenants rather than owners was also highlighted in the paper. CPS calculations finds that just 2.3p is spent on incentivising ownership among low and middle earners for every pound that subsidises renting, hence calling for a redress to this imbalance.

The Centre for Policy Studies also argues that the government should go further than just extending this further than just extending home ownership to current Right to Buy but also revamping it in the form of Right to Own.

This proposals explains that tenants would obtain a mortgage worth 60% of the value of their home which would be paid off in payments that rise at the same rates as social tenant rents rise each year.

Just like any other buyer, once the mortgage ends, the property is owned outright however at a 40% discount mirroring the Right to Buy discount at a lower rate. In emergencies such as employment loss, the tenant would be able to access the equity they had built up, giving them a cushion.

According to the Centre for Policy Studies, today’s proposal provides tenants greater security by providing a share of ownership with increasing rental payment however leaving them better protected in the event of a finacial shock.

The paper reveals the revenue from these sales and the sale of high-value council homes as they become vacant as fund that could be using in financing new wave of affordable social housing – expanding home ownership and housing stock in parallel.

The Right to Buy was one of the most transformatin policies of the 20th century, moving millions of people into home ownership.

-Morton, head of Policy at the Centre of Policy Studies

There are not many strong arguments against this policy. The Government would be doing the right thing by extending this policy to housing associations to take the opportunity to place greater ownership at the core of its levelling up agenda and deliver on commitments made in it’s manifestos.

“Longer term, the government can not only revive the Right to Buy but fully reinvent it for the 21st century by implementing a Right to Own. This would put rocket boosters under home ownership rates whilst protecting tenants and the state coffers.”

-Morton, head of Policy at the Centre of Policy Studies

“The government’s commitment to home ownership, and to the Right to Buy, is hugely welcome. Our report argues that restoring the Right to Buy to housing association tenants, as widely reported, will be hugely welcome – and demolishes many of the left-wing myths surrounding the Right to Buy.

“However, we also urge the government to go further in boosting ownership among tenants of all tenures, for example by turning the existing Right to Buy into a new Right to Own, and incentivising private sector landlords to sell to their tenants, as proposed in previous CPS work.”

Robert Colvile, director of the Centre for Policy Studies

Source: propertyindustryeye.com

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