Former social housing tenants in Northampton made up to £148k in profit by selling on their council house
Experts have called for an end to the Right to Buy scheme here in Northampton after a study revealed more than 500 council houses have now been sold on at a profit since 2000.
Right to Buy was introduced by the Margaret Thatcher government in 1980, offering council tenants who had lived in their home for up to three years the chance to buy it for a third off the market value.
Today, homeowners receive a 35 per cent discount at least if they have been a public sector tenant for between three and five years.
But a study by the BBC Shared Data Unit has found 523 council homes bought under Right to Buy here in Northampton since 2000 have since been sold on - with one seller profitting £148,000.
Tenants who bought their houses netted an average fo £50,000 by selling them on in the open market, having purchased them at the discounted price.
The data also shows that, in 2003, one buyer owned the property for just 27 days before selling it on at a £27,500 profit.
Supporters say Right to Buy has given millions of people the chance to get on the housing ladder and secure their families’ financial future.
But opponents blame the policy for distorting the housing market and for a huge reduction in the amount of social housing stock.
Among them is Paul Dossett, head of local government at financial services firm Grant Thornton UK LLP.
“The Right to Buy scheme has resulted in a huge shortage of social housing, with a staggering number of homes being sold off but not replaced," he said.
"Analysis from the Local Government Association shows that just one new home is built for every five sold."
Tenants who exercise their Right to Buy must repay a portion of their discount to their council if they sell the property within the first five years.
The discount repayment is based on the resale price and ranges from 100 per cent in the first year to 20 per cent in the fifth year. In addition, tenants who wish to sell their property within 10 years of purchase must offer their local authority first refusal to buy it back.
However, housing market commentator Henry Pryor said that far too many people had 'simply profited from a scheme that had much bigger social ambitions' through Right to Buy.
Here in Northampton, latest figures show that 85 new council properties are due to be built by the end of 2020.
But Right to Buy sales are depleting the stock at a rate of around 145 a year. Currently, around 3,250 people are on the housing waiting list, most of whom are looking for one-bed apartments.
Northampton social housing campaigner Norman Adams, a longstanding Right to Buy opponent, agrees that the 1980-implemented policy needs an overhaul.
"What I have been saying for years is now becoming the mainstream view," he said. "Right to Buy is wrong.
"It's helping the few but affecting the many."
In 2016, Northampton Partnership Homes announced plans to build 1,000 new social homes over the next 10 years in the borough.
But the Chartered Institute of Housing says the only way stocks can remain at a good level is if Right to Buy is suspended.
A spokesman for the Institute, said: “We think the time is right to suspend it in England to stem the loss of homes for social rent – which are often the only genuinely affordable option for people on lower incomes.
"Not only are we failing to build enough homes for social rent – Right to Buy means we are losing them at a time when millions of people need genuinely affordable housing more than ever.
“Our analysis shows that we have lost more than 165,000 homes for social rent in just six years and that figure will reach 199,000 if we don’t take action now."
Counillor Stephen Hibbert, Northampton Borough Council cabinet member for housing, said: “Right to Buy was introduced in 1980 and has since allowed many families who would otherwise have struggled to get on the housing ladder an opportunity to own their homes.
“One of the consequences is indeed a reduction in the amount of social housing we have available, which is why we – with Northampton Partnership Homes – have introduced an ambitious programme of house building which we are confident will see around 1,000 new homes delivered within ten years.”