Loophole closure must wait for law to change, but discounts may be cut within a month
Local authorities hoping to close loopholes in the right to buy policy will have to wait until at least 2004. This is because moves to tackle "abuses" of the system, identified by Lord Rooker last year, will require primary legislation.

It is understood that the government could include a crackdown on such abuses in the housing bill to be launched in March.

The news comes as deputy prime minister John Prescott prepares to cut the discounts available to council tenants buying their homes. He is set to allow as many as 97 English local authorities – likely to include the London boroughs and York – to use these new powers.

The deputy prime minister is expected to confirm this week that discounts – which are as much as £38,000 in the South-east and £22,000 in the North-east – will in some cases be slashed by up to half.

A report into right-to-buy "abuses" – where tenants are encouraged by loan companies to buy their homes and sell them on at a massive profit – is due out in the next two weeks from Heriot-Watt University. But even if its recommendations are taken up, it would still be 2004 before any changes could be implemented as part of the housing bill.

Cutting the discount rate could happen much sooner, but Neil Litherland, director of housing at Camden council, north London, said it would be a token gesture if done in isolation. He said: "Reducing the discount available to tenants will do nothing to discourage companies and those operating scams from continuing to use the right to buy in Camden."

Martin Cheeseman, director of housing at Brent council, north London, added: "We would welcome restriction of right to buy, but we still think the proposals could go further."

Many councils favour suspending the right to buy altogether in areas earmarked for regeneration projects that could vastly increase property values.

It is understood that slightly less than 25% of local authority areas in England could qualify for the discounts under criteria that take into account housing availability and the levels of people in temporary accommodation.

Although this change will mainly affect the South-east, high-demand areas in the north of England, such as Harrogate and York, may be included.

The ABC of RTB

The right to buy gives tenants the chance to purchase their homes at a substantial discount, writes Mahua Chatterjee. Secure tenants of district councils, London boroughs, non-charitable housing associations and housing action trusts can exercise the right. They need to have spent at least two years as a public sector tenant and they can buy with family members who have lived with them for more than 12 months or with joint tenants. The discount for houses is 32% and 44% for flats. This means discounts can be as much as £38,000 in London and the South-east. The homes can be resold at any time but if the owners sell within three years of buying it they will have to repay some or all of the discount. If they sell within the first year after purchase then the whole discount must be repaid.

The Scottish model

Restrictions to the right-to-buy system in Scotland came into force on 30 September 2002. All tenancies started after that date are entitled to a right to buy with a five-year qualifying period and a discount period starting at 20% and increasing 1% for each year to a maximum of 35% or £15,000 – whichever is less. Existing tenancies retain the right to buy on the previous terms and conditions. Housing associations were given a 10-year exemption from the right to buy. Only one Ayrshire-based housing association has so far chosen not to claim an exemption. Local authorities can apply for “pressurised area status”, which if accepted allows them to suspend the right to buy for five years. No application to do this has been made since the legislation’s introduction.

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Housing Today