Drop in London right-to-buy sales puts question mark over discounts

Figures released this week by the Office of the Deputy Prime Minister showed a year-on-year decrease of almost 10% for right-to-buy sales in the capital.

However, London was the only one of nine regional areas to record a fall in right-to-buy sales, and the increase in the South east – a rise of 4% compared with the same period in 2001 – was lower than in other areas.

Yorkshire and Humber and the West Midlands showed the highest rate of year-on-year increase, with rises of 37% and 43% respectively.

Figures released in Scotland for July to September 2002 also showed a surge in sales of more than a quarter compared with the same period in 2001.

The figures' release came as changes to the right-to-buy discount system were due to be laid before Parliament. Under the proposals, discounts will be cut from a maximum of £38,000 to £16,000 in 42 local authority areas across London and the South.

Steve Wilcox, professor of housing policy at York University, said that discounts should not be reduced further, as tenants were already struggling to afford to exercise their right to buy under the current system.

He added that right-to-buy sales could provide value for money to the public purse if the right discount level was set – one that offers a real incentive to buy, but is not overly generous. "Smaller discounts mean fewer sales and, in turn, fewer receipts. This represents a lost opportunity for the exchequer to pay-off public debt, or for local authorities to re-invest in housing," he said.

However, Merron Simpson, head of policy at the Chartered Institute of Housing, said the increases in right-to-buy sales across the country indicated the need for action beyond London and the South-east.

"The proposals are aimed at preventing exploitation of the right, but fail to address the loss of social housing in other parts of the country," she said. "There is a strong case for reducing discounts across the country as a whole."

However, research by Heriot Watt University into so-called abuses of the right to buy has failed to find exploitation on the scale originally hinted at by government. The report, published concidentally after the Communities Plan, found companies that offer to finance right-to-buy sales, in exchange for obtaining title to the property at a later date, account for roughly 6% of annual right-to-buy sales in inner London.