§ Ms Oona KingTo ask the Deputy Prime Minister what factors underlay his decision to extend the right to buy discount repayment period to five years. [122326]
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§ Keith HillThe Government's draft Housing Bill, published on 31 March 2003, proposes that the period during which people who have bought their homes under the Right to Buy scheme may be required to repay their discount if they choose to resell should be extended from three years to five years, and that the amount to be repaid should be linked to the resale value of the property less the value of any improvements made by the owner after exercising his Right to Buy.
The Government are concerned that the Right to Buy rules are being exploited by companies seeking to redirect public subsidy for their own profit, and that this is adversely affecting the availability of affordable housing in some areas. There is strong evidence that some companies offer tenants financial help to buy their homes on condition that they resell them to the company after the three-year discount repayment period has ended (deferred resale' arrangements). The companies thus acquire former social homes at substantially less than their market value, and rent them out. This means that homes formerly available at subsidised social rents then command substantially higher market rents, reducing the availability of affordable housing. Research by Heriot-Watt University, published in May 2003, has demonstrated that such exploitation is prevalent in Inner London, where around 2,000 ex-council homes are now privately rented. The aim of the measures in the Housing Bill is therefore to make deferred resale arrangements less financially attractive.