The Right to Buy scheme has seen former council house tenants in the capital enjoy mega returns on owning their properties.
Since the scheme that allows people to buy their council homes at a discounted rate started in 1980, more than 1.5 million council homes in the UK have been sold to council tenants. This has brought the number of council and social housing tenants in the UK down from 42% to 8% now.
Unsurprisingly, it is ex-council tenants in London who have benefited most from rocketing house prices.
Separate research from Savills (See below) reveals that the average amount paid for a property in the capital in 1996 was £79,000, while by 2016 it had risen six-fold to £488,908.
London house price increases
New research by KIS Bridging Loans cites the example of council tenants who bought their flats in a nine-storey block in Clarendon Place, Westminster. Here, a three-bedroom flat that could have been bought for £180,000 in 1995. Similar properties have sold for £2.25 million and £1.8 million in the past two years.
In Hackney, in east London, ex-council houses in Shepherdess Walk that were bought through Right to Buy for £171,000 was sold for £1 million in 2014.
In nearby Islington, in north London, a flat in Middlesex Street was bought for £125,000 and sold for £1.4 million in 2016.
Move further out of London, and the gains are not so significant.
In Dagenham, east London, a two-bedroom house bought for £45,000 was sold in 2007 for £166,500, while a similar house on the same street was sold in 2017 for £310,000.
London property value then and now
But while Right to Buy has helped some council house tenants to get on to the property ladder, housing charity Shelter is concerned that the sell-off has led to a lack of affordable housing.
John Bibby, senior policy officer Shelter, says: “While Right to Buy has helped people who wouldn’t otherwise have been able to afford to buy, the overwhelming majority of homes sold have not been replaced. This has hugely reduced the amount of social housing and played a massive part in the current drought of genuinely affordable homes across the country.”
Thinking of applying for Right to Buy?
The Right to Buy scheme in England helps eligible council and housing association tenants to buy their home with a discount of up to £104,900 in London and £78,600 outside London.
You can apply to buy your council home if:
- it’s your only or main home;
- it’s self-contained;
- you’re a secure tenant; and
- you’ve had a council, housing association or NHS trust landlord for three years - it doesn’t have to be three years in a row.
The Right to Buy scheme is no longer available in Scotland and is less generous in Wales and Northern Ireland.
In Wales, the maximum discount to council house/social housing tenants is £8,000 and you need to have lived in the property for five years.
In Northern Ireland, the amount of discount depends on how long you're a tenant. A council house tenant who has lived in the property for at least five years receives a 20% discount off the market value. The discount increases by 2% for each additional tenancy year to a maximum of 60% or £24,000 whichever is lower.