Labour wants to shake-up the controversial Right to Buy scheme with these three steps

Labour has announced a “social rent revolution” and revealed the Right to Buy scheme is set to change in England to ensure the new homes are not sold off.

A whopping 2,029,311 social homes have been sold to council tenants since Margaret Thatcher brought in the Right to Buy scheme back in April 1980.

With councils unable to build enough homes to replace the ones they have lost, the social housing sector has been decimated and that has had a direct impact on rising homelessness and sky-high rents.

This week, Labour announced its plans for housebuilding over the next 10 years. 

The government revealed that the £39 billion social and affordable homes programme it announced at last month’s spending review would target delivering 300,000 affordable homes over the next decade. That includes what housing secretary Angela Rayner called a “social rent revolution” with 180,000 social rent homes.

Read more:

• More than four in 10 council homes sold under Right to Buy now owned by private landlords
• Right to Buy: The controversial policy that transformed lives
• Four problems Labour must solve to deliver the social housing Britain urgently needs

The target falls below the 90,000 social rent homes a year which campaigners have called for to address the housing crisis. But Labour has claimed that delivering 180,000 social rent homes would be six times more than the number built in the last decade.

However, news that Right to Buy is finally set to be reformed – it has already been abolished in Wales and Scotland – has been welcomed more readily.

Anna Clarke, director of policy and public affairs at The Housing Forum – a membership network for housing and construction, said: “Councils are desperately short of social housing to accommodate people who are homeless and in housing need. The Right to Buy continues to deplete the social housing stock.

“We know that many local authorities are keen to build new council housing, but are put off doing so by the risk of being forced to sell the homes they’ve just invested so much in. Exempting newbuild homes from the Right to Buy won’t affect existing tenants, but will give councils more confidence to build at scale. This is a much-needed reform that we’ve been calling for.”

Critics have described the decision to rein back Right to Buy as an “attack on aspiration”, arguing that the move would lock social housing tenants out of owning their own home.

Hollie Wright, assistant researcher at the New Economics Foundation, told Big Issue the reverse is true.

“Trying to build new social homes while Right to Buy is in place is like trying to fill up a leaky bucket – you’ll lose homes as quickly as you can create them,” said Wright.

“This new exemption should slow these leaks. But without councils having the power to stop right to buy sales completely, the supply of social homes will continue to drain away. When we treat our homes as assets through policies like Right to Buy, we strip away the safety net that people should be able to rely on. A secure, affordable home forms the foundation of an aspirational life – not the other way around.”

Here’s how Right to Buy is set to be reformed.

Resident will have to live in a social home for longer to be able to buy it

Traditionally, a social housing tenant would only have to live in a property for three years before they could look at buying it from a local authority at a discount.

This means that a council can invest heavily in securing planning permission and building a home and, just three years later, lose it and any rental income for a fraction of its value.

So Labour’s reforms will lengthen the eligibility period, meaning that residents will have to live in a home for 10 years until they have the option to make it theirs through Right to Buy.

There will be less of a discount through Right to Buy

Discounts on social homes sold off through Right to Buy can be significant and that has opened the door to a generation of people who would typically not have been able to afford homeownership.

But it’s come at a great cost to local authorities tasked with building more homes.

Under the current rules, living in a house for between three and five years will see the discount for buying a home hit 35%. After five years, that discount goes up 1% for every year a resident has lived in the property.

That continues up to 70% of the value of the property or the maximum discount, whichever is lower, with the maximum changing depending on region. In the North East the maximum discount is £22,000 and this rises to £38,000 in the South East where house prices are higher.

For flats, there is a 50% discount for living in a property between three and five years and that increases 2% for every year spent in the home.

Now Labour is proposing that discounts start at 5% of the property value and continue to rise 1% per year spent in the property. But crucially, the maximum discount will be capped at a cash level or at 15% of value, whichever is lower.

New social homes will be exempt from Right to Buy for 35 years

The threat of losing a home to Right to Buy is one of the major reasons why councils are reluctant to build new homes, particularly at a time when homelessness is already pushing budgets to the brink.

Labour’s big change to Right to Buy will ensure that all new social homes will be exempt from being sold off for 35 years.

This move, that Greater Manchester mayor Andy Burnham has called for, will allow councils the time to recoup the costs of building them.

When will Right to Buy changes come into force in England?

Labour has already made some changes to the Right to Buy scheme since coming into power.

A reduction to maximum cash discounts was announced in last year’s autumn budget while the government has also decided to allow local authorities to keep 100% of Right to Buy receipts to be invested back into building new homes.

Housing minister Matthew Pennycook said more reforms are needed to “better protect much-needed social housing stock, boost councils’ capacity, and enable them to once again build social homes at scale”.

He added: “We will legislate when parliamentary time allows to bring these reforms into force.”

Ahead of the three changes announced above, the government will allow councils to combine receipts with grant funding for affordable housing to speed up housebuilding, the housing minister said in a statement to MPs.

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