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1. INTRODUCTION AND BACKGROUND
1.1 Background
1.1.1 The Right to Buy was introduced in Scotland by the Tenants' Rights, Etc. (Scotland) Act 1980. Whilst local authorities had previously had discretionary powers to set their own policies on selling houses to tenants, the 1980 Act gave tenants a right to purchase for the first time and provided a legal framework to facilitate the sale process. The premise of the Right to Buy was that any eligible council tenant could have the opportunity to purchase their rented home at a discounted price.
1.1.2 The Right to Buy has proved very popular with tenants in Scotland, with over 470,000 2 council and housing association properties sold since its inception. It has also contributed to a major shift in the tenure of housing in Scotland. Around 35% of Scotland's households were in the owner-occupied sector in 1980. Today, this proportion is closer to 67%. Right to Buy has undoubtedly contributed to this significant expansion, alongside the growth of the construction industry and the interrelated demand for market housing. Evidence suggests that most households now aspire to owner-occupation. 3
1.1.3 Successive UK Governments had encouraged the expansion of home ownership, so that by the 1970s owner-occupation was already the majority tenure in other parts of the United Kingdom, although not in Scotland (Jones & Murie, 2006). One issue to consider in looking at the effects of the Right to Buy is the extent to which the Right to Buy has enabled people to access home ownership who would not otherwise have had this opportunity. A key question is the extent to which the Right to Buy has constrained the ability of the social rented sector to meet the need for affordable housing.
1.2 The Right to Buy since 1980
When the Right to Buy was first introduced in the UK, the discount available to tenants began at 33%, with an initial three-year qualifying period. The discount rose by 1% for each additional year spent in a tenancy, and was capped at a maximum of 50% after 20 years. Changes in 1984 then reduced the qualifying period to two years, with discounts starting at 32% and the maximum discount increasing to 60%. In 1986, further changes saw the discounts for flats differ from those for houses for the first time. The discount for flats was changed to begin at 44%, and rose by 2% each year, up to a maximum of 70% after 15 years. Annex B sets out the changes in the Right to Buy discount rates in more detail.
1.3 The Right to Buy today
1.3.1 The Housing (Scotland) Act 2001 made significant changes to the Right to Buy in Scotland. The separate discount regimes for houses and flats were abolished - a maximum discount of 35% was set for both houses and flats, and this was capped at £15,000. New tenants are now required to serve a five-year qualifying period, instead of two years, and discounts begin at 20% and rise by 1% each year. These new arrangements are referred to in this report as the 'modernised' Right to Buy, which took effect on 30 September 2002.
1.3.2 The 2001 changes were aimed at achieving a better balance between the aspirations of households towards home ownership and the housing needs of communities, while maintaining the core premise of the scheme. It was envisaged that reducing discounts would make the Right to Buy less attractive, thereby reducing the number of sales in the longer term and preserving social rented stock in order to help meet housing need. It is important to note that tenants already housed at this date were allowed to retain any entitlement which they had accrued, so long as they remained in their current rented properties. 4 The Executive's consultation on the proposed Bill made it clear that such existing entitlement would not be lost. Tenants in this position are referred to in this report as having the 'preserved' Right to Buy.
1.3.3 Another significant change as a result of the 2001 Act was the extension of Right to Buy to those housing association assured tenants who previously had no Right to Buy. However, these tenants had their new right suspended until 30 September 2012, 5 to allow housing associations time to prepare for the financial impact of the new regime. Furthermore, the Act's provisions also allowed local authorities to apply for pressured area designation, for some or all of their geographic areas. The pressured area mechanism, in effect a temporary suspension of the Right to Buy, is explored in detail in Chapter 6.
1.3.4 Pressured areas are unique to Scotland, and there are no equivalent mechanisms elsewhere in the UK. Unlike Scotland, discount levels in England and Wales are capped on a regional basis, with maximum amounts ranging from £16,000 up to £38,000. There is provision in the 2001 Act for the Scottish Ministers to take powers to vary discounts locally, but these have not been acted upon to date. The qualifying period in England and Wales is the same as in Scotland, at five years, and the clawback period 6 is longer, also at five years (in Scotland this is three years). Discounts in England and Wales start at 35% for houses (50% for flats), rising to a maximum of 60% (70% for flats).
1.3.5 Despite the high numbers of sales over time, Right to Buy is not necessarily the preferred option for all tenants. Research by Holt Brook et al. (2006) 7 found that, for some respondents, renting was simply their preferred option. This was often linked to particular stages in their lives, for example, in the case of some older participants in the research. For others, such as those with young families, renting was n as offering greater flexibility. So, whilst Right to Buy has undoubtedly helped many households into home ownership, it will not appeal to everyone.
1.3.6 These issues are examined in more detail in this report.
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