In a speech today, Prime Minister Boris Johnson confirmed an extension of the popular Right to Buy scheme, which made home ownership a reality for two million households since the 1980s.
Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70% off the market value dependent on how long they have lived there. But housing association tenants have never, until now, had the same automatic right.
The new move has led to fears that affordable housing stocks will be diminished in places such as Milton Keynes, where many people struggle and wait for years to rent a suitable property.
Government says extending the scheme could benefit up to 2.5 million tenants who would gain the right to buy.
But one housing association boss has already said he has “reservations” about the impact this could have on social housing stock.
Nicholas Harris is chief executive at Stonewater, a leading social housing provider with properties in MK. He said: “We are in the middle of a cost-of-living crisis
with people facing a choice between heating or eating. Extending the Right to Buy will diminish the supply of affordable homes available to hard-pressed families.
"I question whether this policy is the right use of scarce resources at this time when it won’t provide additional homes for the people that need them most.”
Government says all homes sold will be replaced ‘like for like’ – but experts say it will be virtually impossible to build replacements without sufficient funding.
According to government figures, more than 50% of today’s renters could afford monthly mortgage costs but various constraints mean only six per cent could immediately access a typical first-time buyer mortgage.
The PM has now pledged to review the mortgage lending market to widen people’s access to low-cost, low-deposit finance such as 95% mortgages.
He’s also promised a Universal Credit reform to incentivise more people to save for house deposits. People who are in work but also on housing benefit will be given the choice to use their benefit towards a mortgage.
His aim is to turn more of ‘Generation Rent’ into ‘Generation Buy’, he said.
“We have a ludicrous situation whereby plenty of younger people could afford to make monthly mortgage payments – they’re earning enough to cover astronomical rent bills – but the ever-spiralling price of a house or flat has so inflated deposit requirements that saving even just 10 per cent is a wholly unrealistic proposition for them,” he said.
The maximum discount a tenant in MK could get is currently £87,200 and this is based on how long they’ve been a tenant and the type of property A tenant wanting to but a house they’ve rented for between three and five years gets a 35% discount. After five years, it goes up 1% for every additional year.
Tenants in flats get 50% discount for three and five years and it increases by two per cent for each subsequent year.
You can use Right to Buy with someone who shares your tenancy, or up to three family members who have lived with you for the past 12 months.