Right To Buy – What’s going to change for UK housing?

Posted 20th June 2022 by ctatax-admin

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us to see if you are eligible for a refund

Read the article on Mortgage Introducer

“The government has unveiled controversial plans to allow benefit claimants to access mortgages in a bid to get millions of people on the property ladder.

Prime Minister Boris Johnson laid out details of the controversial “benefits-to-bricks” plan on Thursday in Blackpool.

According to the government, 2.5 million tenants renting their homes from housing associations will be given the right to buy them outright, echoing the housing policies first introduced by Margaret Thatcher in the late 1980s.

As part of the revolutionary proposals, the government said the reforms to universal credit would “incentivise more hard-working people to save for a house deposit”, adding that a forthcoming review of the mortgage lending market “will aim to turn more of ‘Generation Rent’ into ‘Generation Buy’” by helping them to access 95% loans.

Read more: 4 million in higher SDLT bracket


In addition, the government is aiming to change welfare rules so that the 1.5 million workers on state handouts can choose to use their benefit towards a mortgage, “rather than automatically going directly to private landlords and housing associations”.

Although council home tenants are currently eligible to buy their homes with up to a 70% discount in some instances, the government has stated it wants to extend the scheme to homes owned by housing associations.

Currently, the government spends around £30 billion to help low-income and unemployed people to pay their rent, a large portion of which goes to private landlords.

The government also said it would introduce leasehold reform, including the ability for a leaseholder to buy their freehold, ostensibly to help 4.6 million households to own a home.

At the core of the proposals is a report by the Centre for Policy Studies, called ‘Right to Own’, drafted by former government housing advisor Alex Morton who concluded that waiting lists for social housing have in fact been falling, adding that the UK has the fourth highest stock of social housing in Europe, ahead of both Germany and France.

The new plans come just three days after the PM survived a no-confidence vote and weeks after the government appeared to abandon a pledge to build 300,000 homes a year by the mid-2020s.

When pressed yesterday, Johnson said that he could not give “a cast-iron guarantee that we’re going to get to a number in a particular year”.

According to the BBC’s political correspondent Nick Eardley, this is closely linked to the decision by the government late last year to ditch plans to reform planning laws in England to make it easier for developers to win approval.


Criticised by experts

The latest proposals have been widely criticised by experts, who say they are unworkable, as the lower-paid will still be unable to save enough for a deposit and that the scheme will reduce existing social housing stock.

Polly Neate, chief executive of the housing charity Shelter, described the PM’s housing plans as “baffling, unworkable, and a dangerous gimmick”, claiming it will put the “rapidly shrinking supply of social homes at even greater risk”.

She said: “The maths doesn’t add up: why try to sell off what little truly affordable housing is left – at great expense – when homelessness is rising and over a million households are stuck on the waiting list.

The government needs to stop wasting time on the failed policies of the past and start building more of the secure social homes this country actually needs.”


Miatta Fahnbulleh, CEO of New Economics Foundation, said on Twitter that the policies “are half baked and won’t solve the housing crisis”.

She added: “Right-to-Buy is a relic of a policy that has fuelled our housing crisis for decades. Extending it to solve a problem it catalysed is completely nonsensical.

“Two million council homes have been sold since Right to Buy was introduced in the 1980s, but only 1.2 million homes have been built to replace them. The policy effectively slashed the number of social homes at a time when more and more people need them.”

Read more: Top 10 Stamp Duty reliefs you need to know about


Seb Murphy, head of mortgage finance at JLM Mortgage Services, told Mortgage Introducer (MI): “We see this as a double-edged sword as we totally agree that this group needs assistance.

However, normally the sale of Housing Association and Local Authority properties generates capital which is used to build replacement/additional new, energy-efficient homes, so if that isn’t going to happen, where is the cash generated going?

This is the question that has to be raised as otherwise housing stock will continue to reduce and prices will rise. A cynic may think that this simply creates longer-term problems, in return for some short-term perceived political gain.”


Simon Jackson, CEO at MSS, a technology‑led services firm for the UK property market, said he would welcome “anything which helps to stimulate activity in the housing market”, but added that allowing people to buy a housing association home “removes a property from the rental market for the most needy in society”.

Commenting on the decision to ditch plans to build 300,000 homes a year, he said: “I am not sure anyone believed the government was able to ever deliver on the 300k new-build homes commitment. As such, coming off it means we will still build the 180-220k we always do. Clearly, a co-ordinated strategy committed to increasing that number would be welcome by everyone as it would have a significant impact on supply.”


James Andrews, personal finance expert at Money.co.uk, said the PM was “unashamedly dipping into Margaret Thatcher’s ‘Greatest Hits’ catalogue” in a bid to shore up backbench support following this week’s damaging no-confidence vote.

He said: “While this announcement may delight many of the Tory faithful, the devil will ultimately be in the detail, and it could be a long time before we see those details finalised.

“Mrs Thatcher’s right to buy scheme allowed millions of council tenants to buy their homes at a discount, but 40 years after it came into effect, homeownership has actually fallen back to 1980s levels.

“Many of these homes now seem to be in the hands of private landlords, with the rise in people renting privately almost exactly mirroring the fall in people renting socially since the 1980s.

“There are also concerns over whether the homes passed to social renters under the scheme will be replaced – given the size of the discount right-to-buy schemes offer and the difficulties faced by new housing developments up and down the country.

“Until the finer details are ironed out with input from stakeholders across the housing sector, including major lenders, many question marks will remain over whether the Prime Minister’s ambitious plans will ever amount to anything more than headlines for Britain’s millions of aspiring homeowners.”


Asked by MI if the Right to Buy policy would help boost the housing supply for the most underserved groups, group chairman of Cornerstone Tax, David Hannah, said: “A right to buy policy will enable long term renters who are happy in their current homes to turn themselves into homeowners. The concern is not so much the right to buy but, during this cost-of-living crisis, the ability to buy, i.e. affordability.  Many of these tenants will be first time buyers so, in that sense, this does increase housing supply for what is currently an underserved group.”

He added that the abandonment of housing targets by the government would not affect the housing sector. “Demand for housing is what drives construction activity. Given current analysis I cannot see how abandoning a housing target will affect the undersupply/overdemand for housing in the market at the moment. Excess demand over supply leads to price increases which should make housebuilding even more attractive for developers.”

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us to see if you are eligible for a refund

Contact us today

Here at Cornerstone Tax, we are Stamp Duty Land Tax (SDLT) experts.
You can call us on 01858 894349 or email us at newbusiness@ctatax.uk.com