Another week and Channel 4 are at it again. This time out its Dispatches turn as they investigate “the Great British property divide”. There is a growing fear that the government plans to introduce an extension to the “right to buy” policy, with one of Britain’s largest housing associations revealing that it could cost an estimated £1.3 billion. This will mean selling off lots of valuable council house stock to finance such a financial black hole.
Recently the government promised to extend right to buy to housing association tenants. Under the policy over 1 million tenants will be able to buy their property at a reduced rate. There is talk of a discount of up to one hundred thousand pounds if you make the purchase which sounds great doesn’t it? But it’s not all good news as one of the UK’s largest associations says that although nearly 20,000 of its tenants will be eligible it would come at a cost and that cost could be north of 1 billion pounds if each and every tenant were to take up the purchase for that local authority alone.
The national housing federation is predicting that the policy could cost a total £12 Billion, big figures. Many housing associations are worried about the financial implications with the scheme leaving them out of pocket in a big way as they will be forced to sell off their most valuable stock of houses. Some property experts are also skeptical about the governments plans of raising the £4.5 billion required muted. The view is that raising thee money purely by selling off people’s homes is flawed with one expert saying “There are questions over whether the funding model stacks up. You’re asking for the sale of one council house to fund not only its replacement when construction in many high value areas is extremely expensive, land is rare, hard to come by. ”
“Also it has to fund the replacement of one or more Housing Association homes.”
So what’s this about a property divide? Whereas once you had expensive properties and social housing side by side, if council houses are sold in open market they will be bought by better off families creating an even larger divide.
It’s likely to result in deprived areas become even more isolated and detached than ever before. Thoughts of this gap closing are clearly not on the agenda at the moment and so the big sale is likely to begin. What impact it will have both financially on local authorities and our communities only time will tell.
Have you dealt with the sale and purchase of shared ownerships, new builds or housing association properties? If so, there are well respected, long established firms looking for technically minded individuals that can add experience and technical know how to their current offering.
If you are interested in hearing more about residential property roles with firms in Yorkshire, contact Katherine Scarff on 0113 819 7461 or visit our website BCL legal to find out more.