In a move dubbed by some critics as too little too late, David Cameron has adjusted the discount amounts available via the Right to Buy scheme. The move is intended to get more people into the housing market at a time when the market has been slow due to the economic climate. With a prior assumption being that the highest discount possible would be capped at £50,000, the £75,000 highest discount now available comes as a welcome surprise.
Discounts are calculated using depending on the length of the term of the tenancy and the type of property, i.e. whether the property is a flat or a house.
– Five years tenancy in a house: potentially 35% discount, then 1% for each subsequent year. This will be up to a maximum of £75,000.
– Five years tenancy in a flat: 50% off the price, and 2% for each following year again up to a maximum of £75,000.
Properties up to a value of £50,000 are included in the scheme and the scheme also applies to English properties only. Those worth over £500,000 will be exempt.
The scheme is expected to help around 100,000 people to get onto the property ladder who wouldn’t have previously been able to afford to, and money made from the sales will be directed back into more social housing, David Cameron was quoted as follows when asked about the decision. “Strong families and stable communities are built from good homes. That’s why I want us to build more homes and I want more people to have the chance to own their own home.
“We are acting today across the board to make this happen. We’re rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing in England. And we’re delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home.
“It’s no good hoping people will climb the property ladder if the bottom rung is missing. Affordable properties and available mortgages are vital. So we’re working with leading housebuilders and lenders to get the scheme under way.”
The scheme was originally introduced in the 1980s and this current revamp is intended to show there is still life in the old dog yet, attempting to inject some interest back into a scheme which has been steadily waning over time with sales last year at a measly 3,700 compared to a whopping 84,000 a decade before.