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'Right to Buy' must allow council investment in housing - Calum MacDonald
26/02/1998
Proposed changes to the Right to Buy scheme will encourage longer term investment in council housing, Scottish Office Housing Minister Calum MacDonald MP said today.
Issuing a consultation paper on the proposals, Mr MacDonald said:
"We know that most Scots want to own their own homes and we are committed to their right to do so. The main elements of the Right to Buy scheme should therefore remain in place.
"However, some aspects of the current scheme do not represent good value for money for the tax-payer and lead to an understandable reluctance by councils to invest in their housing stock.
"Current rules limit the discount on a sale if the landlord has spent more than £5,000 on building, acquiring or improving the property in the previous five years. This short period means that local authorities are loathe to spend large sums of money on improvements, only to see houses bought by tenants soon after at discount levels which do not reflect the investment costs.
"Today's consultation paper proposes that councils and other Right to Buy landlords should be able to protect their investment over a ten year period. In addition some major repairs and maintenance costs, which are not currently classed as improvements, should be included when calculating the discount limit.
"The proposed changes strike a better balance between supporting home-ownership and encouraging landlords to maintain a good stock of houses for rent. This not only benefits council tenants now, but ensures the stock is better maintained for future tenants or buyers."
BACKGROUND
1. Some council tenants, and those who have transferred to other landlords with a Preserved Right to Buy, can buy their home, usually at a discount, under the Housing (Scotland) Act 1987.
2. The Cost Floor Rules currently limit the sale discount if the landlord has spent more than £5,000 on building, acquiring or improving the property in the previous five years. The limit means that the sale price cannot be discounted below the level of investment - the cost floor.
3. The Government proposes extending the cost floor period to ten years and including some major repairs and maintenance costs in the cost floor calculation. Views are also sought on options to provide similar protection for other landlords whose tenants have a Preserved Right to Buy.
4. The consultation paper has been sent to councils, Scottish Homes, tenants groups and other interested organisations. Copies of the paper may be obtained from Mr Callum Percy, Scottish Office Development Department, Area 1-G, Victoria Quay, Edinburgh, EH6 6QQ. Comments on the proposal should also be sent to Mr Percy, by May 15, 1998.
News Release: 0371/98
February 25, 1998