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Summary of the evidence

The effects of the Right to Buy have been far-reaching. There are clear links between the uptake of the Right to Buy and the social rented stock which remains today, particularly in terms of the types of properties which are now available to tenants. The availability of social rented housing accommodation has also been affected more generally. The impact of the Right to Buy is evident too on households and on communities. It has had major effects on those tenants who have bought their rented homes, but it has also affected current residents in the social rented sector, and indeed those who have applied to become tenants. The main chapters of this report explore these issues in detail. This summary brings together the principal conclusions to be drawn from the evidence on the effects of the Right to Buy.

Historical trends in sales and the tenure split today

The impact of the Right to Buy on the distribution of tenure in Scotland has been significant. Nearly half a million sales of public sector stock have taken place since 1980 and, almost 26 years after sales began, the tenure mix has been transformed entirely. More than 67% of Scottish households are now owner-occupied - almost double the proportion of owner-occupation prior to the introduction of the Right to Buy.

Between 1980 and 2005, more homes were sold to sitting tenants than were built by the private sector. It is worth noting that this trend has changed over the past ten years, as the rates of new house building in Scotland have increased significantly. Since 1995, new house building has been more significant in increasing home ownership levels than the Right to Buy. Conversely, Right to Buy sales have mainly seen a downturn since their peak in 1989, and have declined by between 12% and 14% over the last two years.

The evidence shows that houses have been sold at a greater rate than flats, although sales of flats have increased markedly since the changes to discount rates and eligibility rules for buying flats in 1986. This has led to a lesser proportion of larger family properties and properties in more popular areas within the social rented stock.

• Right to Buy has widened access to owner-occupation significantly.
• Right to Buy sales have contributed more than private building to owner-occupation, but this pattern has been reversed in recent years, with Right to Buy sales declining.
• A higher proportion of certain types of properties, e.g. larger family houses in high-demand areas, have been sold through Right to Buy, leaving fewer properties of these types within the remaining stock.

The effects of the policy on buyers

Although the high numbers of sales of the 1980s and 1990s are no longer being experienced, the policy still continues to exert an influence in many ways. Qualitative research commissioned for this report found that the Right to Buy tends to be viewed positively by owners of former social rented properties. It would appear to have boosted tenants' confidence in the idea of home ownership, and to have given purchasers a greater sense of control over their housing choices. The experience of Right to Buy among family and friends has been hugely important and, for many, it has led to a culture shift in families, from a culture of renting to a culture of owner-occupation.

The research also found that many existing social tenants viewed the Right to Buy positively. These tenants welcomed the potential opportunity which Right to Buy could offer them, whether or not they aspired to buy in the future. However, both tenants and owners recognised the wider social impacts of the policy, particularly for those in need of social rented accommodation, and were concerned that properties sold under Right to Buy had not been replaced. This research did not find that the Right to Buy had been used overtly by tenants as a way of making financial profit. In relation to the assets which Right to Buy offers, however, buyers did cite the improved financial position as a benefit of buying, and did recognise the purchase as an investment in a broader sense.

The discounts from which purchasers benefit have varied over time. Under preserved Right to Buy terms, discounts have often been substantial, although the recent modernisation has reduced the maximum available significantly. A high percentage of recent Right to Buy sales, the vast majority of which have been on preserved terms, are at or close to the maximum discount. There is, however, some evidence of a recent slight decline in sales at full discount, particularly for houses.

• Right to Buy has had positive effects on purchasers, notably giving a strong sense of control over housing choices and shifting inherent cultural expectations from renting to owning.
• Buyers and tenants recognise the impact of Right to Buy can have in reducing opportunities for future tenants.
• Discounts continue to provide significant benefits for tenants, although future sales under modernised terms will lessen these benefits.

Availability of social rented accommodation - at the national level

Since 1980 the number of lets in the social rented sector has remained relatively constant, despite the decline in stock levels. This is probably because the tenants who purchase their properties are the same cohort of tenants who would have continued to rent their property for some time and would not have made it available for relet ¹ in the near future. It may also be true that the remaining properties are subject to higher rates of turnover because of their type or location. More recently, there has been a slight fall in the number of lets. This could be for a number of reasons, including changes to the ways in which local authorities record lettings rates. Although the Right to Buy has not so far had a significant impact on the number of relets, it has had a significant impact on the types of properties available for relet, making it more difficult to access larger family properties and properties in high demand areas. The opportunities for existing tenants to transfer to more suitable properties have also been affected.

• The number of social housing lets has not fallen as fast as the reduction in stock, but more recently the number of lets nationally has fallen.

Availability of social rented accommodation - at the local level

Relet rates in areas with an estimated significant net need for affordable housing each year are, with the exception of Edinburgh, below the Scottish average, and are significantly lower than relet rates in areas estimated to have a surplus of affordable housing. Sales under the Right to Buy remove rented properties from the social rented stock and therefore have a direct impact on social landlords' ability to provide accommodation. The extent to which sales constrain landlords in this way depends on the availability of affordable housing locally, and on the scale of local new build programmes. The constraints on housing supply as a result of Right to Buy are most readily observed on a smaller scale, at the level of the community, and evidence from pressured area applications shows that rural communities can feel the effects of high sales acutely.

• Right to Buy has varying impacts on relets in different areas, and so planning at the local level - even at the level of small settlements - is more appropriate than a 'one size fits all' national approach.

The Right to Buy and communities - mixing tenure

Although it may also be attributable to wider societal changes, social housing has become increasingly concentrated in the most deprived areas over the period of the Right to Buy. But, at the same time, Right to Buy sales have doubled home ownership in the most deprived areas. In many areas, the injection of owner-occupation through Right to Buy has created mixed tenure communities, and the Right to Buy can be seen to have had a stabilising effect in some areas. There has, however, been an increasing polarisation between areas of high demand with high levels of sales and areas of low demand with low levels of sales. Right to Buy may have encouraged more affluent tenants to stay in their neighbourhood, rather than becoming economically active owner-occupiers elsewhere, and may thus have contributed to neighbourhood stability in some areas.

• The Right to Buy has had mixed effects on communities - in some, concentrations of deprivation have increased. In others, increased levels of owner-occupation have been beneficial in creating stability.

The changed profile of social rented sector tenants

As home ownership has become more accessible to an increasing proportion of the population, the profile of tenants in social rented housing has changed since 1980. Tenants are now more likely to be unemployed, retired or economically inactive for other reasons, such as being long-term sick. Compared with other tenures, social rented sector tenants are now more likely to be single pensioner households or single parent households. Whilst there is a tendency across all tenures for the proportions of households which are either all adults or families to have reduced, the reduction was more marked in social rented housing. Undoubtedly, as prosperity has increased, there has been a marked trend towards increased owner-occupation, but Right to Buy has provided a mechanism that facilitated these changes.

• As a consequence of changes in society, tenants in social rented housing today are more likely to be elderly, single parents or long-term sick, as well as having a greater likelihood of being economically inactive. The Right to Buy has contributed - at least in part - towards this change.

Right to Buy properties post-sale

The evidence on the subsequent sales - or resales - of Right to Buy properties at a national level is now a little outdated, although some local studies have proven useful. The most recent estimate suggests that, by 2002, 37% of Right to Buy purchases had been resold, with 6% of these being rented privately. It appears that resales widen choice at the lower end of the owner-occupied market, and by increasing supply may make prices more affordable, but there is little evidence that they widen access to those who could not have afforded to buy otherwise. The market value of former Right to Buy properties appears not to have risen as rapidly as house prices in other parts of the market. This could potentially make resales more affordable, particularly for first time buyers, but make it difficult for Right to Buy purchasers to trade up. Essentially, the role of resales depends particularly on conditions in the local housing market.

Subsequent purchasers of former Right to Buy properties are more likely to be young, working and part of a family than current social housing tenants, and so the role of resales in making owner-occupation accessible to those in social housing is limited. Resale buyers are more similar to those who bought under Right to Buy originally, although at a different stage in their lives.

• Resales of Right to Buy properties widen choice at the lower end of the housing market, but are unlikely to widen access for those unable to buy housing in the private sector.
• Resales of Right to Buy properties appeal to young, economically active households, and are unlikely to be affordable to most current social rented sector tenants.

Condition of properties sold under Right to Buy

The quality of houses occupied by an owner who bought as a sitting tenant is little different from all social housing, but has a slightly lower level of disrepair than other owner-occupied stock. The evidence shows that Right to Buy owners were slightly more likely to have carried out work over the past five years than other owner-occupiers. Despite some concerns about the condition of Right to Buy properties, and owners' ability to maintain their property, evidence from the Scottish House Condition Survey ( SHCS) does not substantiate these concerns, and recent qualitative research conducted for this report seems to confirm that Right to Buy owners do not have any particular problems with repairs and maintenance. However, the SHCS and the qualitative research may not be fully capturing issues around common repairs and maintenance, which it has been suggested may cause most problems.

• Right to Buy purchasers do not necessarily undertake repairs at a different rate to other owner-occupiers, although there is anecdotal evidence that they may be unable to contribute to the costs of larger common repairs.

The effects of the 2001 Housing Act

It is difficult to draw any conclusions at the present time about the modernised Right to Buy, because most tenants on modernised terms will not be eligible to buy until Autumn 2007 at the earliest. Modelling suggests that sales could be expected to decline to between 7,700 and 9,200 per year by 2011/12, and that housing association sales from September 2012 might increase this by 2,500 to 3,500 each year from 2012 to 2016. Overall, it is estimated that sales over the 10-year period from April 2006 to March 2016 will lie somewhere in the range of 99,000 to 120,000.

One of the aims of the changes in 2001 was to strike a better balance between the needs of the individual and the needs of the community. A less attractive discount regime and the pressured area mechanism were intended to facilitate greater retention of social rented units to meet local housing needs. Since October 2002 new and transferring tenants have been subject to a five-year qualifying period, and so it is (predominantly) only those with preserved rights who have been able to buy in the period between October 2002 and September 2006. Sales have, predictably, dropped as the numbers with preserved discount entitlement have become less year on year.

Whether there will be an upsurge in sales from Autumn 2007 remains to be seen. It is possible that tenants may choose to buy earlier as the benefit of accumulating a larger discount is outweighed by increases in the market value of their property. This could be envisaged in pressured local housing markets in particular. However, many tenants, especially in pressured areas but also across the sector as a whole, may simply not be in a position to buy, given the changing nature of the sector and the changed profile of tenants.

One aspect of the modernised regime which is being utilised by some local authorities is the pressured area mechanism. Although the current designations affect a very small proportion of all tenancies (less than 1%), the effects of the mechanism will be cumulative as more tenancies are held under modernised terms and repeat designations in designated areas would ensure that social rented properties continue to be protected over time. The effects of the mechanism could be heightened after 2012, with a significant number of housing association tenants able to exercise the Right to Buy under modernised terms when the current suspension ceases in 2012.

Given that around 39% of current social tenancies are estimated to be on preserved terms and cannot be affected by pressured area designations, the mechanism is not a replacement for a wider, strategic approach to meeting affordable housing need.

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