The right-to-buy scheme that enables social tenants to purchase their homes with large discounts must be reformed to ensure those most in need have access to secure accommodation, councils have warned.
The cross-party Local Government Association (LGA) said the scheme, first introduced by Margaret Thatcher’s Conservative government in 1980, “can no longer be allowed to exist in its current form”.
This is because right-to-buy is leading to net losses of social housing every year, meaning home ownership is being prioritised over access to safe social housing for many, it added.
The LGA said the Government must introduce reforms to the scheme in the forthcoming budget to address flaws that resulted in 10,896 social homes being sold under right-to-buy in 2022/23 and just 3,447 provided to replace them, a net loss of 7,449.
Councils say this has been caused by the rising discounts for purchasing tenants and restrictions on how councils can use right-to-buy receipts.
The discount rate is set to increase again in April by 6.7%, providing maximum purchase discounts of £136,000 in London and £102,000 elsewhere.
LGA analysis shows the value of discounts provided since levels were increased in 2012 has reached nearly £7 billion.
At the time of the increase, the government committed to replacing each home sold under right-to-buy with a new social home on a “one-for-one” basis.
However, LGA analysis found more than 110,000 properties have been sold under the scheme since, but only 44,000 replaced.
This was because the number of starts on replacement homes has only ever reached a peak of 6,000 annually, meaning the programme for providing replacement homes has consistently failed to deliver at the one-for-one level, resulting in a net decline in social housing stock held by councils.
The LGA said restrictions on how councils are able to spend right-to-buy receipts mean the money raised from the sale of a property does not usually cover the costs of building a replacement property.
Therefore, under the current system, an estimated 100,000 homes will be sold under the scheme up to 2030 but only 43,000 will be replaced.
Acute housing shortages mean more than one million people are said to be currently on council waiting lists, while councils spend £1.74 billion a year on temporary accommodation.
The LGA is calling for a range of reforms to right-to-buy, including giving councils control over how money raised from the scheme is spent on development and property acquisitions.
Councils are also seeking powers to protect their investments in housing and greater flexibility to shape right-to-buy schemes to suit the needs of local areas.
Darren Rodwell, LGA housing spokesperson and Labour leader of Barking and Dagenham Council, said: “We are facing a significant housing shortage in this country which has pushed council budgets to the brink as they struggle to find suitable homes for an ever-increasing number of people.
“While the right-to-buy can and has delivered homeownership for many, the current form does not work for local authorities and those most in need of housing support are simply unable to access secure, safe social housing.
“It is time for the Government to overhaul a system that has seen our social housing stock significantly diminish.
If the Government adopts our proposals, this would allow councils to resume their role as a major builder of affordable homes, which support strong and healthy communities and help to build prosperous places.”
Housing Secretary Michael Gove announced this week that he will intervene in London to push for more developments on brownfield sites in the capital, as part of a wider move to pile pressure on local councils to build new homes.
A Department for Levelling Up, Housing and Communities spokesperson said: “The Government remains committed to the right to buy, which since 1980, has helped over two million social housing tenants to become homeowners.
“We are committed to increasing the supply of affordable housing, and our £11.5 billion Affordable Homes Programme is delivering well over a hundred thousand affordable homes – including tens of thousands of new homes specifically for social rent.
“We have also made it easier for councils to deliver replacement homes and to provide more safe, secure and decent council housing for those that need it, and we have given them more control over how they spend their Right to Buy receipts.”