Recent Developments, Old Complexities Remembered Samantha Cheng - - PowerPoint PPT Presentation

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Recent Developments, Old Complexities Remembered Samantha Cheng - - PowerPoint PPT Presentation

Jul 23, 2023 382 likes •590 views

Right to Buy Recent Developments, Old Complexities Remembered Samantha Cheng (BSc Hons) Sales & Acquisitions Manager London Borough of Southwark www.southwark.gov.uk Housing Act 1980 RTB introduced Minimum qualification period 3

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www.southwark.gov.uk

Right to Buy Recent Developments, Old Complexities Remembered

Samantha Cheng (BSc Hons) Sales & Acquisitions Manager London Borough of Southwark

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Housing Act 1980

– RTB introduced – Minimum qualification period 3 years – Discount 33% up to maximum 50% – (20 years tenancy, 1% rise per annum after 3 years) – Sale of freehold property only – £50k ceiling nationwide – Right to 100% local authority mortgage – £100 deposit allows deferment of sale for 2 years (at original price) – Repayment of discount on simple sliding scale over 5 years – No time limit on cost floor

Average property price UK £23.3k Average property price London £30.5k BoE Interest rate 16.3% Annual RPI change 18%

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Housing and Building Control Act 1984

– RTB extended to the sale

  • f leasehold property

– Minimum qualification period reduced to 2 years – Minimum discount 32% up to maximum 60% (30 years tenancy, 1% rise per annum after 2 years) – Right to Buy on Shared Ownership terms introduced – 380,912 RTB sales achieved to end March 1984

Average property price UK £31.0k Average property price London £43.7k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 2.8 33.4% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 4.0 50.6% BoE Interest rate 9.7% Annual RPI 5%

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Housing Act 1985

  • Consolidation of disparate

housing legislation

Average property price UK £34.4k Average property price London £51.4k First time buyer house price to earnings ratio / %age of net pay UK 2.9 37.8% First time buyer house price to earnings ratio / %age of net pay London 4.3 63.2% BoE Interest Rate 12.1% Annual RPI 6.1%

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Housing and Planning Act 1986

  • Discounts for flats start at

44% increasing to maximum 70% (15 years tenancy, 2% rise per annum after 2 years)

  • Discount repayment

penalty introduced on simple sliding scale over 3 years

  • 530,576 sales achieved

through RTB to end March 1986

Average property price UK £37.6k Average property price London £62k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 2.9 34.2% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 4.7 64.0% BoE Interest Rate 10.7% Annual RPI 3.4%

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Housing Act 1988

– Cost floor period limited to preceding 8 years – Delay notices introduced – 701,053 RTB sales to end March 1988

Average property price UK £51.4k Average property price London £89.7k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 3.4 40.5% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 5.6 75.9% BoE Interest Rate 10% Annual RPI 4.9%

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Leasehold Reform, Housing and Urban Development Act 1993

– Right to local authority mortgage abolished – Right to defer completion abolished – Right to shared ownership lease abolished – Rent to mortgage introduced – 1,132,866 RTB sales to end March 1993.

Average property price UK £51.2k Average property price London £67.8k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 2.4 20.5% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 2.8 26.3% BoE Interest Rate 5.9% Annual RPI 1.6%

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Statutory Instrument 1998 No 2997

– Regional discount ceilings introduced ranging from £22k in North East to £38k in London (new claims only), effectively lowering discounts for many applicants. – Cost floor period raised to preceding 10 years – 1,333,804 RTB sales to end March 1998

Average property price UK £65.2k Average property price London £103.8k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 2.5 24.4% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 3.5 34.8% BoE Interest Rate 7.2% Annual RPI 3.4%

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Statutory Instrument 2003 No 498

– £16k reduced ceiling in London, some South East areas and Watford (new claims only) – 1,633,523 RTB sales to end

  • f March 2003.

Average property price UK £127.2k Average property price London £214k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 4.0 31.5% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 5.6 44.8% BoE Interest Rate 3.7% Annual RPI 2.9%

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Housing Act 2004

  • Minimum qualification period raised to 5

years

  • Effect of deferred resale agreement

introduced

  • Right of first refusal introduced
  • Tenants with ASBOs or demoted tenancies

precluded RTB

  • Initial demolition notice suspends RTB for

maximum 5 years

  • Final demolition notice ends RTB, no new

claims for 2 years

  • Residence qualification raised to minimum 5

years

  • Discount penalty raised to 5 year sliding

scale dependent on original discount to market value ratio

  • Rent to mortgage abolished
  • Discounts for houses start at 35% increasing

to maximum 60% (30 years tenancy, 1% rise per annum after 5 years)

  • Discounts for flats start at 50% increasing

to maximum 70% (15 years tenancy, 2% rise per annum after 5 years)

  • 1,717,625 RTB sales to end March 2004

Average property price UK £148.4k Average property price London £233.1k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 4.7 39.9% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 6.1 53.2% BoE Interest Rate 4.0% Annual RPI 3.0%

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Statutory Instrument 2005 No 1735

  • Landlords must provide

secure tenants certain information about RTB

  • 1,776,273 RTB sales to end

March 2005

Average property price UK £156.3k Average property price London £240k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 4.8 42.2% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 6.1 54.8% BoE Interest Rate 4.6% Annual RPI 2.8%

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Housing & Regeneration Act 2008

– Maximum period for initial demolition notice increased from 5 to 7 years. – Concept of “tolerated trespass” addressed. – Review of redetermination introduced – 1,846,996 RTB sales to end March 2008

Average property price UK £169k Average property price London £278.6k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 4.8 45.0% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 6.4 60.8% BoE Interest Rate 4.7% Annual RPI 4%

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Statutory Instrument 2012 No 734

– Cost floor period raised to preceding 15 years for properties built or acquired after April 2012 – Maximum discount raised to £75k nationwide (new and existing claims) – 1,861,496 RTB sales to end March 2012 (average 3,625 per annum for last 4 years from highs of over 130,000 per annum in late 80s)

Average property price UK £163.6k Average property price London £299.3k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 4.4 33.7% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 6.6 51.9% BoE Interest Rate 0.5% Annual RPI 3.2%

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Statutory Instrument 2013 No 677

– Maximum discount in London raised to £100k (new and existing claims) – 1,869,898 RTB sales to end March 2013

Average property price UK £168.9k Average property price London £325.4k First time buyer house price to earnings ratio / mortgage payments as %age of net pay UK 4.5 32.6% First time buyer house price to earnings ratio / mortgage payments as %age of net pay London 7.2 53.2% BoE Interest Rate 0.5% Annual RPI 3.0%

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Statutory Instrument 2014 No 1378

– Maximum discounts linked to rises in CPI

Average property price UK £182.3k Average property price London £381.6k First time buyer house price to earnings ratio UK 4.8 First time buyer house price to earnings ratio London 8.4 BoE Interest Rate 0.5% All figures to end of 2nd quarter 2014

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What’s coming….

  • Maximum discount percentage for

houses to rise to 70%. When?

  • RTB agents signposting to available

finance, advising on delay notices, etc

  • Reduction in minimum qualification

period from 5 years to 3 years with Deregulation Bill/Act, expected Oct/Nov 2014

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Where does this leave us?

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Sources

Average house prices Nationwide, ‘House Price Index’ ‘Regional Quarterly Indices (Post ’73)’ [Online], Available: http://www.nationwide.co.uk/about/house-price-index/download-data#xtab:regional-quarterly- series-all-properties-data-available-from-1973-onwards Bank of England interest rates Bank of England, ‘Official Bank Rate History’ ‘Statistical Interactive Database - official Bank Rate history’ [Online], Available: http://www.bankofengland.co.uk/boeapps/iadb/repo.asp First time buyer house price to earnings ratio Nationwide, ‘Affordability Estimates’ ‘First Time Buyer House Price Earning Ratios’ [Online], Available: http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/downloads/ftb- hper.xls First time buyer mortgage payments as %age of net pay Nationwide, ‘Affordability Estimates’ ‘First Time Buyer Affordability Indices’ [Online], Available: http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/downloads/ftb- affordability-indices.xls RPI Office for National Statistics, ‘Consumer Price Indices - RPI indices: 1987 to 2014’ http://www.ons.gov.uk/ons/datasets-and-tables/data- selector.html?cdid=CZBH&dataset=mm23&table-id=2.2 RTB sales Gov.uk, ‘Live tables on social housing sales’, ‘Table 671: annual Right to Buy sales for England’ [Online], Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/311069/LT671.xlsx

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Sources

Statutory Instrument 2012 No 734, The National Archives, ‘The Housing (Right to Buy) (Limit on Discount) (England) Order 2012’ [Online], Available: http://www.legislation.gov.uk/uksi/2012/734/pdfs/uksi_20120734_en.pdf Statutory Instrument 2013 No 677, The National Archives, The Housing (Right to Buy) (Limit on Discount) (England) Order 2013’ [Online], Available: http://www.legislation.gov.uk/uksi/2013/677/pdfs/uksi_20130677_en.pdf Statutory Instrument 2014 No 1378, The National Archives, The Housing (Right to Buy) (Limit on Discount) (England) Order 2014’ [Online], Available: http://www.legislation.gov.uk/uksi/2014/1378/pdfs/uksi_20141378_en.pdf

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Contact

Samantha Cheng | Sales & Acquisitions Manager | Home Ownership Services Tel 020 7525 4338 | Fax 020 8929 9387 Email samantha.cheng@southwark.gov.uk | Web www.southwark.gov.uk Correspondence | 153-159 Abbeyfield Road, London SE16 2BS Office | 160 Tooley Street, 3rd Floor - Hub 3, London SE1 2QH