Right to Buy (Hansard, 28 July 1998)

§ Ms Armstrong

My Department issued two consultation papers today setting out our proposals.

We intend the Right to Buy scheme to continue, and that eligible tenants should continue to buy at substantial discounts. At present, however, tenants get up to £50,000 discount. The annual cost of Right to Buy is currently around £400 million a year.

We plan, therefore to introduce lower limits to discounts, which would take account of local authority property values in each Government Office region. Details are in our consultation paper "Secure tenants' right to buy; proposals to change the maximum discount limit on right to buy and other home ownership incentive schemes", copies of which are in the Library of the House.

Subject to consultation, we propose later this year to substitute a new regulation for the Housing (Right to Buy) (Maximum Discount) Order 1989, SI 1989 513, to bring the new discount levels into effect.

Around 200,000 people in England have bought a council flat. These are mainly council tenants who bought under the Right to Buy scheme and research shows that the great majority see this as good value for money. But a small proportion of buyers are in difficulty with high service charges, and some are unable to resell their flat on the open market: either they cannot find a buyer, or mortgage lenders refuse to give a loan.

Local authorities have powers to buy housing, but their resources are limited and they have many other people needing help. So we propose to offer them a financial incentive. We plan to reduce the amount they have to set aside from their capital receipts from council house sales, by 25p for every £1 they spend on buying back an ex-council property. This would effectively cover 25 per cent. of the cost of the buy-back. They could use this incentive to buy back houses as well as flats.

In addition to this incentive, the authority would regain a capital asset which, sooner or later, would be available for reletting. Moreover, it would reduce the cost of 125W managing its leasehold property—which, in the case of someone in arrears or unable to resell, could be considerable. And in some cases, e.g. an elderly or vulnerable person in mortgage arrears, it would be helping someone whom it might otherwise have to re-house.

Local authorities are best placed to judge who is in greatest need and how they should use their resources to help them. So they would be free to decide whom to help, and on what terms. This could include someone who had bought under a local authority voluntary sale scheme.

We propose to set just two conditions. These are designed to ensure that the concession is available only for buying back properties from individual occupants who want to re-sell. The concession would therefore apply only where the repurchase is from an individual, not an organisation: and it is not done under compulsory purchase powers.

Copies of the consultation paper "Buying back ex-council flats and houses" are in the Library of the House. Subject to consultation, we propose to implement the change later this year by substituting a new regulation for regulation 104 of the Local Authorities (Capital Finance) Regulations 1997.