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Right to Buy Sales increase Matthew Warburton - 06/09/2013

R2B_300The latest statistics on Right to Buy sales were published on 22 August, showing that 2,149 council homes were sold in April to June 2013. The Government's press release put the best possible interpretation on this news, pointing out that this is nearly five times as many as the 443 sold in the same quarter of 2012.

However, the statistical report makes the point that sales in April to June 2012 were significantly less that the average of around 600 sales in the three preceding quarters, and may have been low due to tenants waiting until the new discounts came into force before making their applications to buy. And sales in April to June 2013 were actually rather less than the 2,450 sales recorded in the preceding quarter.

But these are picky points. There were three times as many sales in the twelve months to June 2013 as in the preceding 12 months, which shows that the Government's reinvigoration of the Right to Buy is having a significant impact. But it is important to put this in perspective.

The increased discounts have helped, but a stronger economy, higher employment and more money in tenants' pockets would help even more. Sales in April to June 2013 were still less than half the number in the same quarter of 2006, before the banking crisis hit.

The statistics also show that the average sales receipt was £60,000, which casts an interesting light on the likelihood of receipts funding the one-for-one replacement programme the Government claims it has put in place.

Using the same assumptions of an average attributable debt of £17,000 and transaction costs of £1,300 as were used in CLG's exemplification of the replacement scheme, this yields a net receipt of £41,700, enough to support 30% of a replacement home costing just £139,000. I wonder in how many areas land and construction costs make that possible.

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