Right to Buy Surges on London Property Price Highs

Anyone who thought Right To Buy was no longer a force in the housing market should look at new government figures which show a 38 per cent rise in sales of council flats and houses, with a third of transactions taking place in London.

In the first three months of 2014 local authorities sold 3,376 homes – that is a 38 per cent rise on the 2,450 sold in the same quarter of 2013. Local authorities in London accounted for 31 per cent of sales in the past 12 months with the volume of transactions rising just as private housing costs (to buy and rent) have soared in the capital.

Across the UK as a whole, the 11,238 dwellings sold in 2013-14 compares to 5,944 sold in 2012-13.

Critics of the Help To Buy scheme, introduced to stimulate demand for homes in the past 12 months, have tended to ignore the impact of RTB which offers what is effectively huge public subsidies to tenants to buy their homes, as well as removing the purchased properties from the stock of homes for those unable to buy or rent on the private market.

Introduced by the Thatcher government in the 1980s, and eventually backed by Labour, Right To Buy is attributed with playing a significant role in the increase in owner-occupation in Britain until recent years.

There was a downward trend in Right to Buy sales in the mid 2000s, and the number of sales fell greatly between 2007 and 2010 because of the credit crunch.

But the Coalition government has increased discounts given to long-standing tenants – in April 2012 the DCLG changed the maximum cash discount available for Right to Buy sales to a new higher level of £75,000 across England and for the past year the maximum discount available for tenants living in London boroughs is now a remarkable £100,000, a contributing factor to the rise in RTB sales in that part of the country.