GEORGE Osborne will today unveil a significant extension of the government’s Right To Buy scheme, raising the discount on tenants buying their homes in London from £75,000 to £100,000.
The announcement, which comes in the wake of increasing disparity between property values in London and the rest of the UK, is expected to result in a new wave of property buying in the capital.
The scheme, which offers tenants of council housing a sizeable discount if they choose to purchase the property, was extended by Osborne last year. The chancellor upped the discount to £75,000 – or up to 60 per cent of a house’s value – across the country in 2012’s budget. Prime Minister David Cameron had made it a key policy early in his tenure after previous Labour governments had reduced the discount in certain areas where housing was in high-demand, including London.
The discount, which is set to remain at £75,000 for the rest of the country, is being upped in London since the higher cost of property in the capital means that prospective buyers require more of an incentive.
Government figures released last month showed that less than two thirds of properties are now owned by their tenants, meaning home ownership has fallen to its lowest level since 1987, generally seen as the height of the Thatcher government’s Right To Buy scheme.
The extension of Right to Buy could also boost property developers by bringing in more demand for house building. The scheme promises that for every home sold under Right to Buy, a new affordable property will be built.
While property values in certain sections of the country have slumped since the financial crisis, prices in London are at record highs, with the average house now costing above £400,000 and expected to rise by a quarter in the next four years.