Right to Buy discount cut will keep 25,000 homes in the sector, MHCLG says

Explaining the changes, the Ministry of Housing, Communities and Local Government (MHCLG) said that returning discounts to “pre-2012 levels” will deliver a “fairer and more sustainable scheme that offers better value to the taxpayer”.

The department added: “It will do this by better protecting council housing stock to meet future housing need, and better enabling councils to replace the homes sold whilst supporting a reasonable proportion of social tenants to buy their home.”

In the last financial year, 10,896 homes were sold through Right to Buy and only 3,447 have been replaced, according to the Local Government Association (LGA).

MHCLG concluded: “Councils have not been able to replace all stock sold since 2012 in spite of a one-for-one replacement target indicating that discounts have not been at a level that enables councils to retain a sufficient portion of the receipt to replace sold stock.”

In 2012, as part of a “reinvigoration” of Right to Buy, the maximum cash discounts were increased to £75,000 nationally. 

The current average discount on a Right to Buy home is £72,000, with a maximum discount from April 2024 of £136,400 in London and £102,400 outside of London, MHCLG said. 

The average percentage discount for council sales is currently around 40% of a property’s value. 

Under the new measures, the discount on Right to Buy sales will return to pre-2012 levels, MHCLG said. In the South East of England, for example, the maximum pre-2012 discount was £38,000. In the North East of England, the maximum discount was £22,000. 

However, MHCLG said: “The reduced discounts will be kept under review to ensure that the right balance between protecting social housing stock and enabling tenants to access homeownership is being struck.”

A consultation will also be run to decide the percentage discount as this will require primary legislation, MHCLG said. 

“This consultation will explore amending the percentage discounts to better align with the new maximum cash discounts,” the department said.

Secure tenants are currently eligible for Right to Buy if they have been tenants for at least three years. 

The Chartered Institute of Housing (CIH) was among those that raised concerns about the number of homes sold under Right to Buy that end up in the private rented sector (PRS).

An estimated 40% of homes sold under Right to Buy are in the PRS, according to CIH analysis and a report by the Greater London Authority.

Charity Shelter has also campaigned for changes to Right to Buy, which was introduced in 1980 during Margaret Thatcher’s first term as prime minister.

Polly Neate, chief executive of Shelter, said: “With homelessness at record levels and a temporary accommodation bill in the billions, we desperately need investment in genuinely affordable social homes.

“The government’s announcements to top up the Affordable Homes Programme and limit Right to Buy are the first steps in delivering these.”