Impact of RTB Legislation on Supply of Social Housing

The UK is battling a cost-of-living crisis amid an unprecedented housing shortage. The Housing Act of 1980 empowered local authority tenants to purchase properties at discounted rates. Interestingly, the legislation resulted in the growth of the private rental sector instead of boosting home ownership. The drop in home ownership is also because of a steep rise in house prices and higher private-sector rents. This makes it difficult to save enough funds for a mortgage deposit. According to a report, many private rental homes were former council homes.

t-of-living crisis. Tenants of council homes can get a substantial return for paying rent for several months as they become property owners. The right to buy reduces dependency on the state. The person can sell the home after three years with no obligation to repay the discount.

A rise in unjustified works bills

A rise in unjustified works bills

A wave of enormous repair bills is hitting planetrent.co.uk/blog/proposed-amendments-to-the-leasehold-reform-planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal-judgments-and-legal-costs-bill'>leaseholders out of the blue. It is common for planetrent.co.uk/blog/proposed-amendments-to-the-leasehold-reform-planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal-judgments-and-legal-costs-bill'>leaseholders to receive bills as high as £100,000 and more. The reason for such high demands is the lack of reserve funds, as there is no control over how they spend their money. Councils are reluctant to build social rent homes as they are skeptical about losing the investment when they have to sell the properties at a discount.

Right-to-buy legislation has done more harm than any benefit for the social housing sector, as investors own most of the ex-council property in London and elsewhere. The Right to Buy scheme failed as it did not boost home ownership. Greedy property investors are quick to exploit the situation by luring elderly council tenants with funds to help them exercise their right to buy. This is on the condition that they purchase the property at resale.

Merits of the Right to Buy

Merits of the Right to Buy

Individuals who were public sector tenants for a minimum of three years qualify for the right-to-buy scheme provided it will be their only property. There was impressive growth in home ownership, resulting in the sale of 1,992,799 council homes under the right-to-buy plan. People who exercise their right to buy become more responsible citizens while striving to keep their neighborhoods trash-free and clean.

Right to buy is a lucrative option because liberal discounts help people become homeowners despite the cos

Demerits of the right to buy

Demerits of the right to buy

A major disadvantage is that it is not possible to maintain the number of homes by building new ones. For example, against the sale of 53,000 homes in 2000, there were only 18,000 newly built homes. The main disadvantage of the right to buy is the shortage of social housing. The number of affordable housing units in the UK dwindled to 4.2 million from 5.5 million when the government introduced the scheme. The 2018 Midlands Pilot attempted to replace right-to-buy homes on a like-to-like basis but miserably failed because of the inadequacy of funds.

The devastating impact of the right to buy

The devastating impact of the right to buy

The rampant abuse of the right-to-buy is clear from the fact that investors now own over 40 percent of right-to-buy homes. The right-to-buy scheme has benefitted investors and helped the private rental sector flourish. It is high time the government mandated owner-occupation for the right to buy homes, as the very purpose of the scheme was to boost home ownership.

The Right to Buy scheme encouraged the proliferation of expensive private rental housing that lacks regulation and control. It was supposed to boost homeownership among young people but failed miserably. The government must take steps to control the private sector instead of considering the extension of the Right to Buy to tenants living in housing associations. The time is ripe to consider scrapping the Right to Buy scheme to restore the supply of affordable housing.