An additional £9.1bn of residential sales per year could take place as a result of the Conservatives’ extension of the Right to Buy scheme, according to research conducted by Savills exclusively for Estates Gazette.
Savills calculates that 23,000 homes could be bought each year by housing association tenants employing Right to Buy. Based on an average value of £208,000 per home, this would total £4.6bn of transactions.
On top of this, the Tories estimate that £4.5bn of property will come to market as local authorities are forced to sell properties as they become vacant.
The extension of Right to Buy was the headline-grabbing announcement at the Tory manifesto launch on Tuesday. Prime minster David Cameron pledged that if his party came to power an additional 500,000 people would be eligible to buy their housing association homes, bringing the total to 1.3m.
However, local authorities possess only a finite number of assets to sell off to fund the policy and the rate at which they can be sold depends on how quickly they are vacated.
Susan Emmett, director of residential research at Savills, said: “Given the country’s continuing aspiration for home ownership, this is a shrewd pre-election announcement. But fully extending the Right to Buy to housing association tenants is easier said than done.
“Many housing associations operate as registered charities. Granting the right to buy for tenants of homes owned by charities would mean charitable assets being effectively sequestered, which is not something English law has supported.”
If Right to Buy is extended to housing associations it could also result in less development in the long run, as banks would be less likely to lend, as outlined in a research note from Fitch Ratings on Thursday.
As a result, housing associations could face financing difficulties, forcing them to cut development.
