Councils are renting sold Right to Buy homes, says report

A "sold" sign outside a house Tom Copley wants councils to retain equity in Right to Buy homes that are sold

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Some London authorities are having to rent their own ex-council homes from landlords who bought them under the Right to Buy scheme, a report claims.

Research by London Assembly member Tom Copley says 52,000 homes - 36% of those sold - were being let out by councils.

The homes are being rented at higher market rates, the report says.

The Labour politician said the system needed to be reformed but the government said the scheme helped to create more affordable homes.

Of the homes that are being let, a "substantial" number are being let to tenants who are now supported by housing benefit, according to the study.

Mr Copley has recommended that there should be mandatory covenants on all Right to Buy properties so they cannot be let through the private rented sector and that local authorities should retain an equity stake in any property sold.

'Indignity of renting'

He said the practice had "helped to fuel the increase in the housing benefit bill, heaped more pressure on local authority waiting lists and led to more Londoners being forced into the under-regulated private rented sector".

"This shows that Right to Buy currently represents incredibly poor value for money to taxpayers," Mr Copley said.

"Not only did they pay to build the home in the first place, they then subsidised the considerable discounts offered to tenants and then missed out on the rental income that would have covered the build costs.

"Now, we have the indignity of London boroughs renting back their former council homes at higher market rent levels, once again costing taxpayers through the nose."

According to the report, 36% of about 145,500 properties in London where the council still holds the freehold are to be put on the rental market.

Tower Hamlets has the highest proportion of such properties up for renting - 50.5%, Enfield comes second with 49.8%, followed by Kingston with 45.6%.

A statement from the Department for Communities and Local Government said: "Under our reinvigorated Right to Buy scheme, every additional home sold will be replaced by a new affordable home to rent.

"Of course, the original home may be sold on or rented out down the line, yet there is clear benefit as our scheme helps reduce social waiting lists and increases the overall housing stock both across London and across the country."

Under current rules, council tenants and housing association tenants who were in their home when it was transferred from council landlords have the right to buy their properties at a discount, after five years as a tenant.

The current maximum it can be reduced by is £100,000 in London.

The scheme was originally introduced in the 1980s, however, the government brought it back in 2012.‬

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