Right-to-buy will stay says government

The government has denied reports it is preparing to cancel the right-to-buy scheme for local authority tenants.

John Prescott, deputy Prime Minister, has complained that discounts of up to £38,000 on purchase prices lose the Treasury money. Transfer of housing stock to the private sector also threatens targets for affordable key-worker housing.

Labour is concerned about right-to-buy abuses, whereby tenants purchase at a discount, only to sell or rent at market values. Last week, the Prime Minister&#39s official spokesman confirmed “there are difficulties with the scheme” but said Labour has “absolutely no intention” to end right-to-buy.

Andy Linnett, director of LMS Specialist Mortgage Packagers, says: “If the government says no to right-to-buy now there will be an absolute uproar. Tools like discount caps should be enough to solve any problems.”

Stuart Aitken, director of credit at SPML, says: “Right-to-buy abuses are extremely unlikely to have a significant effect on property sales. This is simply an excuse for an unpopular proposal. What is needed is massive investment in affordable housing.”

Aitken says SPML and other lenders “cannot legislate against abuses” beyond checking tenants are eligible for right-to-buy.

He adds: “You have to ask why local authorities are put in the position where they have to sell properties due for demolition, knowing the authority will inevitably have to buy the property back.”

SPML takes nearly 10% of its business in right-to-buy. Platform Home Loans and igroup are other lenders with dedicated right-to-buy products.