To not be outraged by people 'taking advantage of' Right to Buy?

[WeBuiltThisBuffetOnSausageRoll]

www.bbc.co.uk/news/uk-47443183

This article is about criticism of people making a profit with Right to Buy. It says that 140 people in GB made a collective profit of £3m by buying and selling their houses in the space of one month, including a man in Solihull who bought for £8K and sold for £285K just over a week later.

Firstly, the 'profits' amount to an average of under £22K each, so hardly a vast fortune.

Secondly, unless I'm mistaken, the idea of RtB is to take into account all of the rent that the buyer has already previously paid - that's why buyers get a very generous discount on the market value, so a 'profit' is clearly built into the system as a fundamental principal.

Thirdly, the people have to live somewhere, so it's not like they can just pocket the cash and continue as they were - in order to sell the house, they must vacate it, meaning that they have to buy somewhere else to live (or pay a much larger private rent, which would rather defeat the purpose of their selling in the first place). Considering that ex-council/HA houses and areas tend to sell for less on average than houses in areas that have always been privately owned, buying a different house with the proceeds is likely to leave them worse off - unless they seriously downsize - maybe their children have now grown up and left home - which means that a desperately-needed larger family house is being released into the system.

If RtB sale prices are calculated to take account of rent already paid over the years, then the buyer will, on paper, have likely made a handsome profit. What difference does it make if they remain living in a house for which they paid a knock-down price for another 20 years or if they sell it straightaway and buy a different house which they are then able to buy mostly with the proceeds of their generous 'discount'?

Am I missing something here?

The discount has to be repaid if the house is sold within a certain amount of time after being bought so selling that quickly would not net any profit.

@Surroundedbycats it would if they made more than the discount as has been the case in London.
RTB as a concept is deeply flawed. Paying way below market rent for years in a stable tenancy gives you opportunity to save a deposit and buy a property without taking one out of social housing stock, so that someone else can't have the opportunity for the same rent discount.

If they sold it within a week, they wouldn't be making any or very little profit as the RTB discount has to be repaid back within the first 5 years should you sell.

You have to keep the property for 3 years otherwise you pay the discount back it goes down by 33.3% a year.
You also have to take into account that to qualify for the discount you have to have been renting for a long period of time, in most areas not London obviously, these people have paid for the house in rent over what they could have bought it for when they moved in.

I find RTB an indicator that every fucker is in it for themselves. Where I live everyone hates Maggie thatcher (still) but they all love the fact they bought their council houses for fuck all and profited massively. Subsidised rents and below market valuations, motivated enough people to get excited about real estate and now look where we are, most households need dual income to pay a mortgage and areas of Britain are inaccessible to some. Excellent work......

Thanks a lot for your opinions, folks - some very good points. I didn't know about having to repay any discounts if you sell quickly. If that's the case, then the complaints are even more ridiculous.

FWIW, I'm not personally in favour of RTB with a discount. It's very unfair when many people struggle to pay often significantly higher private rents and yet never get a discount if they subsequently get the landlord to sell it to them. Possibly at market value, if you and your family have become settled (although surely you should always be aware when renting that it's never your own home and you're likely to have to move at some point).

I just couldn't really understand why the opprobrium at getting a house at a massive discount that you haven't been previously living in as opposed to one that you've just moved to.

It wouldn't be so much of a problem if the housing was replaced at an appropriate rate but it hasn't been for so long that it causes this problem.
Private landlords wouldn't make so much money if there was more social housing to go around. It wouldn't be worth it for them so they wouldn't be as likely to bother at all.

I think it's a terrible thing, theres not enough (actually) affordable housing, new builds are bought up by landlords.

I think you would have to be certifiable though, if you had the option and didn't buy though, but it's truly a win for the individual not the community

Where I live everyone hates Maggie thatcher (still) but they all love the fact they bought their council houses for fuck all and profited massively.

This also in London people who bought In he 90s have made millions pound.
My mum works with a woman who made £2m on a house.

My parents bought their council house for £12k in 2000. They'd lived in it so very 1980 and are still there now. It can be a good thing, especially in areas with slow housing turnover.

If you want to get cross about something, get cross about buy to let landlords buying up all of the affordable housing then charging a fortune and not looking after it properly.

It's hard to blame people for taking advantage of the opportunity to buy their home at a discount. The housing crisis is not their fault.

I don't blame individuals, I blame the system. They should build far more council/HA properties, and people should probably still have the RTB, but new properties should take this into account. Far too much housing is in the hands of people and organisations whose primary motivation is profit, not provision of secure and affordable housing.

Although the article was flawed if it didn't mention the fact that you lose the discount if you sell within a certain period. I know that BIL and SIL bought their council house and they had to stay there for 3 years or else they would lose some or all of the discount.

the opprobrium at getting a house at a massive discount that you haven't been previously living in as opposed to one that you've just moved to

Sorry, I've just realised that that made no sense! You know what I meant, though

It's hard to blame people for taking advantage of the opportunity to buy their home at a discount. The housing crisis is not their fault.

I completely agree. I don't blame them at all.

I wonder if the council ever check to see if a bought house has been sold on. Can't imagine they have time for that these days.

I think RTB is a terrible idea. The notion that because you are housed by the council you can buy your house at a huge discount is ridiculous. Those in privately rented houses don’t get this benefit.

Also makes no sense when the local authority can’t house all those that need housing. Supply isn’t meeting demand as it is.

IMO any assistance to help FTB should be available to all and not just a class of people.

@bagpuss I think the purchaser signs a standard security in favour of the Council. If the purchaser wishes to sell within the 3 year discount period, then the Council will only discharge the standard security if the discount is repaid (a bit like signing a standard security in favour of a mortgage lender, they don't discharge it unless the mortgage is repaid)

RTB should have been scrapped years ago when it was clear we weren’t replacing sold off council houses

This country needs to move away from the idea that property ownership is so important

It is based on wanting to hand down ownership after death to children- but given much will get swallowed up in care costs nowadays it’s often pointless on that front.

A long term stable low cost tenancy is amazing and should be valued much more than it is. If renting was the norm we wouldnt ghettoise council properties so much and people would genuinely value them as an amazing resource.

There should be no right to own a house but a right to decent low cost safe housing should be a right available to many more than it is.

Right to buy has been abolished in Scotland

Yes it's so 'fair' that I and others have to scrape by on our pretty shit wages, yet not qualifying for any benefits, get zero discount on rent and pay way above what a mortgage payment is, and then if we want to buy a house, we have to hope that we can save the 5% deposit which is massive in most areas, or have very kind relatives (this is the option we had to use). Oh and even if we stay in the same rental house for years, we receive no discount if we then wish to buy it.

Yet someone in a council house, not paying into the system as much as the rest of us, can pay below the rental charges for a number of years, and then be entitled to buy the house for a discounted rate. And within a few years make a massive profit.

Yeah that's a very fair system.

Why does everyone say we must learn history to avoid making the same mistakes when we keep making the same mistakes regardless? Has selling council houses ever worked? No. Will it ever? No. Will the government keep shelling out money to keep replacing those houses, effectively losing money constantly? Yes.

Round and round in circles we go.

I don't blame individuals, I blame the system. They should build far more council/HA properties, and people should probably still have the RTB, but new properties should take this into account. Far too much housing is in the hands of people and organisations whose primary motivation is profit, not provision of secure and affordable housing.

Absolutely spot on.

Just thinking aloud and I haven't thought it through, but I wonder how it would affect things if the law gave ALL renters the right to buy the house once they've lived there for, say, 5 years (or at least those renting from professional landlords who only ever bought the portfolio in order to rent them out - maybe those with 10 or more rental properties - as opposed to accidental landlords or people living away for a while and renting out their own home) - with the price taking into account the rent already paid.

I don't know if this could be a good thing or absolute bonkers, if played out in real life. Of course, you'd have to legally prevent or dissuade landlords from terminating agreements after 4 years every time.

If nothing else, it would take some of the power from people like that 'delightful' couple in Ashford, who pretty much dictate most of the local rental market and have multiple prejudices coming out of their ears when it comes to whom they'll rent to (well, him, at least).

@Deadbydaylight
Exactly my thoughts! It benefits such a small amount of people and also means that the housing needs of others isn’t met.

IMO council housing should be seen as temporary, as a stepping stone to get people into rented or their own housing. It shouldn’t be a permanent resolution for people. The notion of passing down an asset to kids that was never really the parents isn’t really logical either.

I don't blame the people buying the homes, I'd probably take advantage of it myself if I could!

It's the system that allows it that's the problem.

YABU
For obvious froth thread.

IMO council housing should be seen as temporary, as a stepping stone to get people into rented or their own housing. It shouldn’t be a permanent resolution for people.

Yes, THIS.

Most food banks only give you a few days' worth of food (which doesn't sound like an immense help to me, personally) - but nobody would suggest that people should be going to a food bank every week for years instead of a supermarket.

Kind of like the old 'Give a man a fish/Teach a man to fish' - even if you have to lend him the fishing rod for a while.