Right to Buy: Key Changes Announced for November 2024
Introduced in 1980, the Right to Buy (RTB) scheme allowed tenants of social housing to purchase their homes at a discounted rate. In line with Labour’s manifesto pledge to review the scheme, the government has announced significant revisions in its first Budget on 30 October 2024, which will take effect from 21 November 2024. These updates will primarily affect RTB and Preserved Right to Buy tenants, although Right to Acquire remains unaffected.
Discount Reductions
Currently, RTB tenants can enjoy discounts of up to £102,400 across England, or £136,400 in London. However, starting from 21 November 2024, these discounts will be significantly reduced to their pre-2012 levels. The new discount rates will vary regionally, and will depend on the location of the property. The maximum discounts by region are as follows:
| Region | Maximum Discount |
|---|---|
| North East | £22,000 |
| North West | £26,000 |
| Yorkshire and the Humber | £24,000 |
| East Midlands | £24,000 |
| West Midlands | £26,000 |
| Eastern | £34,000 (except Watford, £16,000) |
| South East | £38,000 (except certain districts, £16,000) |
| South West | £30,000 |
| London | £16,000 (except Barking and Dagenham, and Havering, £38,000) |
It’s important to note that these figures represent the maximum discount available and are still subject to eligibility criteria, previous discounts received, and the cost floor rule.
Any RTB applications submitted before 21 November 2024 will still be eligible for the current, higher discount levels (£102,400 in England and £136,400 in London).
Discount Uprating Freeze
Currently, RTB discounts are adjusted annually based on the Consumer Prices Index (CPI), but the government has explored different options for future uprating. They considered increasing the discounts by house price inflation, or discontinuing automatic uprating altogether, instead adjusting the limits on an ad-hoc basis.
The decision has been made to freeze the annual uprating of RTB discounts for the time being, to avoid affecting the ability of local councils to replenish their housing stock. Although the government intends to review the maximum discount levels periodically, no further annual increases will occur for now.
Changes to the Cost Floor Rule
The cost floor refers to the total amount spent on a property by a housing provider, including acquisition costs, construction, repairs, and maintenance. If the cost floor exceeds the market value or sale price of the property, the discount will be reduced accordingly.
Currently, the cost floor rule allows for a 10-year period prior to the RTB application, or 15 years for properties built or acquired after 1 April 2012.
From 21 November 2024, the cost floor period will extend to 30 years for properties built or acquired after 1 April 2012. However, for tenants with Preserved Right to Buy, the 15-year rule will remain unchanged, regardless of when the property was built or acquired.
Key Dates and Transitional Arrangements
In an effort to prevent a surge of applications and the resulting increase in RTB sales (a trend seen in previous scheme changes), the government has introduced a brief three-week window for RTB applications before the new changes take effect. Applications submitted before 21 November 2024 will still qualify for the current, higher discount rates.
Given the scale of these changes, it’s expected that there will be a significant rise in RTB applications in the lead-up to 21 November 2024, and social housing providers should be prepared for a higher volume of requests.
