The Budget and the Right to Buy

The Autumn Budget announced on 30 October 2024 made many major changes. One particularly striking change was to the right to buy. 

The right to buy was introduced in the 1980s under Thatcher’s Conservative government and allows council tenants to buy their home at a discount. The discount was increased by the Conservative government in 2012, and Boris Johnson previously proposed extending the right to buy to housing association properties in 2022, though this fortunately never took place. 

The discount under the right to buy varies depending on the property type, the value, the location of the property and how long the tenant has lived there. The right to buy has been problematic since its inception, leading to a huge loss of social housing in circumstances where there is a serious shortage of the same. Local authority housing stock has not been replaced at the rate that it has been lost through the right to buy.

Prior to the changes in the budget, the maximum discount for a London property was either 70% of the value of the property, or £136,400, whichever was lower. Outside of London, the maximum discount was either 70% of the value of the property or £102,400, whichever was lower.

However, as a result of the changes within the budget, from 22 November 2024, the maximum discount is 70% of the value of the Property or the specified maximum discount for the Property’s region if lower. In London, the maximum discount is now £16,000 which is far lower than beforehand and effectively removes the feasibility and appeal of the right to buy. Similarly, outside of London, the maximum discount has been reduced and varies by region: the highest maximum discount is in the South East and is £38,000, again a huge decrease from before. 

Through the budget therefore, the discounts applicable when exercising the right to buy have returned to pre-2009 levels.  This was a smart and speedy solution to the catastrophe that is the right to buy and should curtail further haemorrhaging of council housing pending future legislative reform. It dramatically reduces the appeal and viability of exercising the right to buy, especially in London, without any of the delays and debates that would arise in making legislative change. 

The Budget further revived local authority entitlement to keep all the receipts generated by sales of their properties under the right to buy, the same having previously been introduced in March 2023 but ended in April 2024. Prior to this, a significant percentage of the proceeds were sent to the Treasury, and local authorities were only able to use a further percentage towards building or buying new homes. This did not allow one-to-one replacement given the discounts and loss to the treasury under the right to buy, resulting in overall net loss of local authority funds and housing. The budget therefore aims to also boost the capacity of councils to replace social housing that is lost under the right to buy.

The Labour government has so far said that there are currently no plans to abolish the right to buy. This is disappointing, especially in circumstances where the same has been abolished in Scotland and Wales, and in circumstances where it is clear that the right to buy has been a disaster for social housing and homelessness.  However, the changes arising from the budget should help to slow the decline in the level of local authority housing and protect this vital resource, while also increasing the resources available to local authorities to replace the homes that are lost under the right to buy.