‘Right to Buy’ extension has far reaching implications on wider housing market

When the Government announced plans last year to extend the right to buy to all social housing it was met with criticism from the off. Currently council tenants have the right buy the property from their respective council at a substantial discount and after a period of three years. The plans state that this will be opened up to any housing association tenant giving an additional 1.3 million people the discounted option to buy their home.

As the dust settles from the initial announcement it becomes clear that the decision could have far reaching consequences for the housing market as a whole and not just the longevity of housing associations. Here we examine the potential issues:

• The Government claim to want to boost the housing market and facilitate those who desire to own their own home and work hard to get on the property ladder. However, the introduction of Right to Buy could significantly deplete housing association stock, cause problems for councils where stock is already depleted, affect vulnerable people from being housed and suffocate new growth in the sale of new homes for first time buyers as well as negatively impacting private rentals.Whilst the intentions might seem honourable there is nothing forthcoming as to how it will work in reality, and how housing associations will cope with the expected surge in demand.
• Given the expected take up of the right to buy from housing association residents there is little information about how suitable housing will be replaced when one gets purchased. Replacing a home one for one may not be an achievable prospect given the squeeze on available land and the rate at which new homes might be built.
• Little thought seems to have been given to the fallout in the wider market. For instance how private landlords will attract tenants given that housing association rental could lead to home ownership within a 3 year rental period. This could in turn lead to a reduction in available rental properties leaving those who don’t qualify for housing association homes, yet cannot afford to buy privately, stuck between a rock and a hard place.

With the new implications to landlords on buy-to-lets / owning second homes and the existing pressure on the need to build new homes, it will be interesting to see what impact Right to Buy has on the housing industry.