‘We must remove the shackles of stigma’: Five ways Labour wants to shake-up Right to Buy

Labour may once and for all address one of the most notorious British policies: Right to Buy. Since the policy was first introduced in 1980, every year has seen a net loss in social housing stock as successive governments failed to replace housing bought or demolished.

On Wednesday (20 November), the deputy prime minister and housing secretary Angela Rayner launched her party’s review of the policy. It works by allowing social renters to access homeownership – or buy their council home – with a significant discount on the market value of their property.

Margaret Thatcher introduced Right to Buy in 1980. Her intention was to expand homeownership to less well-off households. Since then, more than two million homes have been sold through the scheme.

Today around 1.3 million households are on social waiting lists in England. Labour’s consultation is aimed at how to stem the loss of such housing.

The Scottish government removed the Right to Buy in 2016. Wales abolished the Right to Buy and the Right to Acquire in 2019. Half a decade later, here are five ways Labour want to change Right To Buy in England.

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Council tenants may have to live in home for a decade to gain right to buy

The government is seeking views on whether it is possible to replace all future sales of social homes on a one-for-one basis. Under the proposals, tenants may have to wait more than ten years to buy their homes – and those living in newly built social homes may never be able to buy.

Official figures show 11,000 council or housing association homes are built each year, but last year 23,000 were sold off or demolished, meaning a significant net loss. Labour wants to reverse this decline by slowing sales and boost building of homes.

Social home building hit 30,000 new homes a year during former prime minister Gordon Brown’s leadership from 2007 to 2010. However, some housing groups claim council housebuilding needs to rise to 90,000 social rent homes a year to address the UK’s shortfall of 4.3 million homes.

To counteract this, ministers want to increase the minimum amount of time tenants have lived in their social home before they can buy. Currently, tenants have to live in their home for three years – reduced from five years in 2014. The government is seeking views on whether to raise it to 10 years, or more than 10 years.

Labour also wants to increase the length of time newly built social housing are protected from being bought to between 10 and 30 years or “permanently”.

Rayner said this would make the process of home ownership for people “fairer”.

“We cannot fix the crisis without addressing this issue – it’s like trying to fill a bath when the plug’s not in. A fairer Right to Buy will help councils protect and increase their housing stock, while also keeping the pathway to home ownership there,” she said.

Discounts for social homes won’t be as lucrative

Under Right to Buy, people who have lived in their house for between three and five years can claim a 35% discount on the market value of their property. After five years, the discount rises by 1% for every year they have lived there.

For those who live in flats, the discount is 50% for the same year span. It then rises by 2% for every year of their tenancy after that, with a maximum discount claimed of 70%.

Labour wants to applying the same rules to both houses and flats.

These discounts are set to fall significantly from the maximum rate of £102,400 or up to £136,400 in London. Labour are proposing to go back to 2012 levels – a maximum of £16,000 to £38,000 off, depending on region.

Tenants currently have to repay this discount to the council if they then sell the property on within five years of buying. The government wants to extend this to 10 years.

Rayner is now consulting on further restrictions which would also impose a maximum discount of between 5% and 20%. This would set discounts at whichever is lower of the existing cash amount or the percentage cap.

Rayner said: “We are seeking views on eligibility criteria, protections for new-build properties and rules around the replacement of the homes sold.”

Councils have previously said they are in favour of this policy. They believe ensuring newly built council homes cannot be sold into private ownership will both help them house homeless families but also boost their finances via rental income.

Gavin Smart, Chartered Institute of Housing chief executive, said: “Local authorities should be able to recover the cost of discounts if homes are sold within 10 years, perhaps giving them discretion to vary this in exceptional circumstances.

“The aim of Right to Buy should be to help existing tenants into homeownership, and the potential loss of the discount deters new owners from simply selling on, potentially at a higher price, after a few years.”

Local authorities to have flexibility on how to spend council homes receipts

Labour wants to consult on giving councils retention of all of the receipts from sales of council homes, including the Treasury’s share, which totals around £183m every year. The measure will allow councils to better protect their housing stock as well as offering breathing space to increase it.

Labour hopes allowing councils to pool receipts with grant funding could boost social housebuilding. They can do this by combining them with section 106 contributions – a legally binding lump sum of money made by a developer to a council to mitigate their impact on local community infrastructure – to help build more homes.

The autumn budget recently confirmed that government investment in housing will increase to £5bn for next year. This includes £500m in new funding for the affordable homes programme to support efforts in delivering new affordable and social homes across the country.  

Mr Smart added: “The scheme of reduced discounts is very welcome. As long ago as 2006, the UK Housing Review showed that discounts above 35% could not be justified on economic grounds, and the new scheme rectifies this. It also made little sense to incentivise sales of flats, when we have subsequently seen huge service charges for leaseholders due to the cost of tackling building safety issues.”

Councils to replace stock sold with homes for social rent of the same size and same area

Labour want their consultation to show that, eventually, all homes sold under Right to Buy are replaced on a one-for-one basis. The consultation is also seeking views whether replacement homes should be for social rent, whether they should roughly the same size and in the same area, and whether it should introduce a target to replace all future Right to Buy sales on a one-for-one basis.

Exemptions are also up for consultation. Labour want to see a proposal to amend the types of properties which are currently exempt, which critics have argued include outdated definitions, such as sheltered housing with resident wardens, which are not commonly used today.

It’s a big deal for Labourto change Right to Buy

Rayner said her life was transformed by social housing and being able to buy her home under Right to Buy.

During a speech at the Social Housing Annual Conference in London on Wednesday, she recounted her personal experience growing up in a council home in Stockport.

“We didn’t have a lot, but we had a safe and secure council home,” she said. “And later when I needed a home to raise my son, I was given my own council home. I haven’t got to where I am today in spite of coming from a council house but because of it.”

Rayner added: “We must remove the shackles of stigma that is too often associated with social housing.”

She has faced scrutiny of her own use of Right to Buy to make a profit on her home in Stockport, which she bought in 2007 after living in it for three years, with a 25% deposit, before selling it on in 2015.

Allies deny suggestions of hypocrisy, saying she had been a council tenant for more than a decade and bought her home under more restrictive Blair-era rules.

Kevin Hollinrake, the shadow housing secretary, said: “Labour are now pulling up the drawbridge on home ownership and limiting aspiration and social mobility. It’s the height of hypocrisy for Angela Rayner to constrain the policy that helped her move onto and up the housing ladder.”

To contribute to the consultation on Right to Buy, head to the UK government’s website.

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