I am not suggesting that the scheme is sensible overall, but for individual families then it is good.
I bought my council house 8 years ago
After the purchase my mortgage payments were lower than my rent.
You are right, who wouldn't buy their council house, given the chance? And if your mortgage was lower than your already subsidised council rent was than that just shows what a massive discount on the market value of your house would have been had you been a private buyer buying it from a private seller. Except that the private seller would have had to pay for all the repairs and maintenance and refurbishment in the time that they had owned it, whereas if you needed a new boiler or a new garden fence you just picked up the phone and you got one.
And now you are free to sell your house and keep all the difference between your mortgage and the current sale price/value for yourself. Yep, you'd be mad not to. Free money. Meanwhile there is a serious shortage of social and low cost housing.
A friend of my brothers got on the housing ladder in The 80s when this policy came out. He bought his grandmother's large 3 bed semi for £20k.
Yes I know someone who did exactly that as well. I'm not sure about how the finer points of that arrangement worked, but I think it was an appalling idea to allow anyone other than the tenant to buy it. For example what happened when the relative in question died and all of the benefits of that arrangement went to the one grandchild who bought the house at huge discount? Also what if the relative was still technically penniless and had to go into a care home for several at tax payers expense? If the relative had bought the house themselves there would have been a forced sale to pay for that care, but in this scenario the state would have paid for care while the grandchild merrily reaped the benefits of renting out that house, or by selling it at massive profit. How is that right?
I actually think the this government (and the last Labour government) would quite like to get away from the old fashioned notion of council estates and council housing and have them all in the private sector because ultimately it's much, much cheaper and simpler to pay a huge housing benefits bill that goes to private landlords and housing associations than it is to run a wholesale council housing system with all the enormous associated costs.
But the flaw is that lots of private landlords either won't or can't take certain categories of tenant due to the high risks and high costs involved, or are prevented from doing so by the conditions of their mortgage.
Council houses are allocated according to 'need' but they are not taken away according to lack of need. So once you have that council tenancy you have it for life even if your circumstances change and you can well afford to buy or rent in the private sector.
And if you get the chance to buy it at a discount and then sell it on, or rent it out for profit and move somewhere else, then it's a no brainer, isn't it?
Except that every time someone does that it's one less house in the social housing system that can house the sort of tenant private landlords won't / can't touch.
As for the council buying back the property, what on earth would be the point of that madness, and how can they justify the cost? Surely if they need more houses it would be cheaper for them to build from scratch than to sell off their assets for tuppence, then buy them back again 5 years later for full market value? 
The whole thing is a poorly thought out joke.