Right to buy still in demand

425,000 council tenants have exercised their right to buy their council home over the last nine years, spending a collective £15.7billion, according to research by Connells Survey & Valuation. They have benefited from discounts totalling £10.3billion. In the last year, 16,896 became home owners spending £1.15billion.

The numbers are much smaller today than in the past as new rules have restricted eligibility and reduced the discounts that tenants receive. The peak year was 2003/4 when almost 70,000 families stepped on to the housing ladder by buying their council homes.

The average discount has fallen by almost half from 50 per cent a decade ago to 27 per cent this year, but there is huge regional variability. The highest discounts available are in the North West with 34 per cent, and in London they are lowest, at just 14 per cent. [See table (a)].

Ross Bowen, Connells Survey & Valuation Managing Director commented, “In the late eighties and early nineties, right to buy provided an opportunity for many families to get onto the property ladder. But as the political climate changed, councils have reduced the discounts available in an effort to retain levels of social housing stock and stop what some see as profiteering.

“Nonetheless, thousands are still benefiting from these schemes but they need to be careful. There are some pitfalls associated with ex-local authority properties which they should be aware of.”

According to Connells Survey & Valuation research, the risk of having to carry out repairs on local authority homes is far higher than on homes in the private market. 37 per cent of local authority properties have interior and/or exterior faults compared with just 28 per cent of owner occupied dwellings.

When considering the age of local authority housing, the incidence of serious structural faults is also significantly higher. Local authority homes are much newer on average than privately owned homes; 78 per cent have been built since 1945. Yet the proportion of council homes with serious structural faults is almost the same as the older private homes, 11 per cent compared to 12.5 per cent.

All of this means that the average cost of making necessary repairs to a local authority home is a massive 48 per cent more than a similar sized privately owned property.

Ross Bowen continued, “Although there is a lot of good quality social housing stock around, some, particularly that built in the sixties and seventies is inferior; we are seeing the consequences of that today with higher levels of defects. Furthermore, local authorities have reduced their repair bills by a total of £421m since the early nineties.

“Families who exercise their right to buy are typically more financially vulnerable than the average home buyer. More than most, they need to be really careful that they are not saddling themselves with unexpected repair bills. With right to buy discounts being so much lower than in the past, people must be careful not to invest without having the condition of their home thoroughly checked by a fully qualified surveyor.”