The government recently decided to hail the reinvigorated ‘Right to Buy’ scheme as a total success, Richard Carr has learned, suggesting that it’s helping to solve the ever-worsening UK housing crisis.
Right to Buy
No one would want to be a first time buyer right now. The Office For National Statistics’ July 2015 House Price Index showed that the average UK house price grew by 5.2% to £282,000 in the year to July 2015. Coupled with the UK’s current notorious lack of housing stock, it’s too expensive for first time buyers to purchase a residential property in the current market.
Back in 2012, the government sought to tackle this pressing issue by unrolling an updated version of the Thatcher-era ‘Right to Buy’ Scheme. The programme’s designed to help people land that first crucial step on the property ladder, by allowing most council tenants to buy their homes at a significant discount.
Three years on, the recently re-elected Tory Government has hailed the scheme as a total success. They released figures that show since 2012, it has created almost 40,000 new home owners. In the second quarter of 2015 alone, 2,779 households used ‘Right to Buy’ to purchase their council house. ‘Right to Buy’ sales brought roughly £223 million into the coffers of local authorities during this period, a rise of 5% from the same quarter in 2014.
Government figures also indicated that there were 3,644 new starts and acquisitions since the ‘Right to Buy’ was reinvigorated in 2012. Housing Minister Brandon Lewis explained that this means that the 3,054 additional homes sold in the first year of the scheme are already being replaced, nationally, on a one for one basis. Explaining further, Lewis was quoted by Property Wire saying:
“This reinvigorated scheme has turned that (‘Right to Buy’) around, and means nearly 40,000 people have been able to buy the home they love, many of whom might otherwise never have had the chance to become homeowners. On top of that, it’s getting homes built, with councils replacing the additional homes sold on a one for one basis.”
Opportunity for developers?
This may be, but is ‘Right to Buy’ really solving the UK’s housing crisis and allowing first time buyers to step up onto the property ladder? The BBC reported that charity Shelter revealed that one in three councils in England haven’t replaced a single home sold through ‘Right to Buy’ since way back in 2012. Just 8% built enough residential properties to replace even half of properties sold through the scheme.
‘Right to Buy’ is helping people get on the property ladder, but it can’t create new properties fast enough to relieve first time buyer demand. In Richard Carr’s opinion the supply/demand ratio that currently characterises the UK housing market presents a lucrative opportunity to savvy property developers. There’s a clear market that’s crying out for more affordable homes; the developers who meet this demand could stand to generate a great return on investment.