Government ends policy enabling councils to keep 100% of Right to Buy receipts

The Right to Buy, introduced in 1980 by Margaret Thatcher, enables council tenants to buy their council home at a discount.

The size of the discounts was increased in 2012 under a relaunch of the scheme, to a maximum of £87,200 across England and £116,200 in London.

Until recently, councils previously had to give a proportion of the receipt from any Right to Buy sale to the Treasury, typically between 20% and 25%. 

Last March, government informed local authorities that they would be allowed to keep all Right to Buy receipts for 2022-23 and 2023-24 in an attempt to boost housebuilding.

The end of the policy comes at a time of significant financial hardship for councils, with several effectively declaring bankruptcy in the past five years. 

In January, councils warned at an emergency summit that temporary accommodation costs – which reached £1.7bn last year – could spell the end of local government. 

Last month, London Councils warned that boroughs in the capital are facing a funding shortfall of at least £400m in the next financial year amid a “bleak” outlook. 

Senior figures from at least 16 large English local authorities will meet next week to tackle an “increasing threat” to council housing from a “broken financial model”.

According to Budget documents, the government will increase the cap from 40% to 50% on the percentage of the cost of a replacement home that can be funded from Right to Buy receipts. 

Darren Rodwell, housing spokesperson for the LGA, said: “This Budget has missed a key opportunity to allow councils to permanently retain 100% of sales receipts. 

“While increasing the cap will help to make some housing schemes viable that would not otherwise be, it would be better to remove this cap entirely as the impact of the cap increase in supporting the delivery of replacement homes will be limited. 

“Right to Buy in its current form has resulted in a significant loss of our social housing stock. Failing to extend the retention of RTB receipts permanently will only continue to contribute to this loss.”

A DLUHC spokesperson said: “We provided councils with the flexibility to keep their Right to Buy receipts in full as a temporary measure. 

“Councils have five years to spend these receipts and we are monitoring their delivery of new affordable housing to see if further flexibility is required again in future.

“Last year saw one of the best years on record for affordable housing delivery, and through our £11.5bn Affordable Homes Programme we will deliver thousands more affordable homes to rent and buy across the country.”

A report last month into council housebuilding from University College London called for the Right to Buy to be abolished.