Councils demand to keep home sales cash

EXPANDING Right to Buy will dramatically cut the number of council homes as they are “impossible” to replace, local authorities have warned.

The Local Government Association, which represents councils, has criticised plans to expand the Right to Buy scheme to housing association tenants. It said the Government’s promise to replace these properties one for one was unattainable because of red tape.

Under Right to Buy, which was introduced when Margaret Thatcher was prime minister, council tenants can buy their homes at a discount, depending on how long they have been in the property.

The scheme has helped millions of people onto the housing ladder. However, it has been criticised for depleting the supply of council homes, which are being replaced at a rate of just one in three in England, new data showed.

David Renard, of the LGA, said: “It is becoming impossible for councils to replace homes as quickly as they’re being sold, and they are increasingly having to do so with far less money than the property sells for because of discounts being offered.”

Those using Right to Buy get an average discount of 42pc on the property. This means councils receive little more than half the market value of homes sold, yet they still have to give a large chunk of this to the Treasury.

But an even bigger problem is the red tape on the money that is left. Government rules mean Right to Buy receipts can only be used to cover 40pc of the cost of building replacement properties, and councils are unable to combine this money with other grant funding.

The LGA urged the Government to give councils new powers to set Right to Buy discounts locally and be able to keep all of the sales receipts.

A government spokesman said: “We will be working closely with housing associations to make sure that homes sold are replaced one for one.”