How Derbyshire ‘Right to Buy’ homeowners ‘raked in thousands’ with quick sales
Several Derbyshire council house tenants who bought their homes at a large discount have sold them on after less than a year – making thousands in profits.
Information compiled by the BBC’s Shared Data Unit shows that over the past 18 years in the UK, 110,000 former council house tenants sold off the home they had been offered at a discount price.
These discounts were offered under a government scheme called Right to Buy (RtB) – based on the amount of time the person has been living in the home.
In Derbyshire, nine former council house tenants bought their homes and sold them off within a year.
The house which was sold off in the shortest amount of time in Derbyshire was in Bolsover.
A former tenant sold their house in 2004 just 19 days after buying it – making a £26,000 profit, that’s £1,368 for each day they owned it.
The most profit taken in by any of the houses sold within a year was £85,141 for a home in Erewash in 2007.
Five of the nine homes which were sold off within a year of purchase were in Derby.
The house in the city kept for the shortest amount of time was sold after 48 days for a £36,150 profit – £753 a day.
Right to Buy, which offers large discounts to council tenants who buy their home, has been one of the most divisive housing policies of the past 40 years.
The Housing Act, which came into force on 3 October 1980, included giving the Right to Buy to more than five million eligible council tenants in the UK.
Then-Prime Minister, the late Baroness Thatcher, said it would pave the way for a “property-owning democracy”.
Since its inception, more than 1.9 million homes have been sold under RtB in England, more than half a million in Scotland, 140,000 in Wales, and 122,000 in Northern Ireland.
Supporters say it has given millions of people the chance to get on the housing ladder and secure their families’ financial future.
Meanwhile, opponents blame the policy for distorting the housing market and for a huge reduction in the amount of social housing stock.
Today, homeowners receive a 35 per cent discount if they have been a public sector tenant for between three and five years.
After five years, the discount increases by one per cent for each extra year of tenancy.
This stretches up to a maximum of 70 per cent – or £80,900 across England and £108,000 in London boroughs (whichever is lower).
Tenants who exercise their RtB must repay a portion of their discount to their council if they sell the property within the first five years.
The discount repayment is based on the resale price and ranges from 100 per cent in the first year to 20 per cent in the fifth year.
On top of this, tenants who wish to sell their property within 10 years of purchase must offer their local authority first refusal to buy it back.
The BBC Shared Data Unit published original sale prices and re-sale prices for 53,000 former council houses sold since 2000.
The total profit made on these houses was £4.3 billion.
This also takes into account the amount of money – if any – which former tenants have had to pay back to the council for selling their property after a short amount of time – such as after 19 days in Bolsover.
The profits listed are the overall sums which the tenants kept after any discount payments are paid back to the council.
On average, tenants made £43 a day in profits with around 4.6 per cent overall making a loss.
The average amount of time people kept these homes was seven-and-a-half years.
However, 20 were sold within a week of purchase with one resident, in Lewisham, London, selling their house the next day for a £36,000 profit.
A Bolsover District Council spokesperson said: “The way we deal with selling council properties is regulated by the Government’s Right to Buy scheme which can cause difficulties for us.
“It places restrictions on how much we can sell a property for and how much we receive from the sale of that property.
“We have urged the Government to review their policies to make it a much fairer system which will help us invest more in our housing stock.”
Erewash Borough Council referred a request for comment on to EMH Homes.
Christine Ashton, executive director of housing at EMH Homes, said: “The Right to Buy was introduced by the Government for council tenants in 1980, and extended to some housing association tenants in 2016.
“At the time of their sale, all the homes sold under the statutory RtB in Erewash were council-owned.
“In 2002 the housing stock was transferred from the council to a specially-created housing association. The organisation was renamed Three Valleys Housing in 2006, and taken over by emh homes in 2011.”
A spokesperson for Derby City Council said: “If a property is purchased under the Right to Buy Act the new owner of the property can sell the property whenever they choose, but if a property is sold within five years of buying it under Right to Buy, some or all of the discount has to be repaid.
“Within the first year of purchase, the whole discount will have to be repaid.
“In the second year four fifths has to be repaid, reducing by one fifth each year until after five years no discount is repaid.
“The repayment of discount is ensured by registering the details as a Land Charge at the time of sale by the council.”