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How hundreds of council tenants have become property millionaires in just 6 years.

Tuesday 22 August 2017

Hundreds of ex-council tenants have become property millionaires as a result of the government's 'Right to Buy' in the past 37 years.

The Tory initiative, which launched in 1979 under then Prime Minister Margaret Thatcher, was part of a campaign to allow more people to own their own home - by selling off council houses and flats at a heavily discounted rate - of up to 70% cheaper.

At the time, 49% of people were living in local authority housing. Since the 1980s some 1.5 million council homes in the UK have been sold to council tenants through the scheme.

Today, as demand for homes - and prices - have soared, thousands of these buyers have become hugely wealthy as a result - in one London borough flats sold in 1995 for £100,000 are now worth a mammoth £1.8 million, according to a report .

Just outside of the capital, a 2-bed house in Dagenham, Essex, purchased for £45,000 in 1995 is now worth £310,000. That's almost seven times the original purchase value.

 

 

 

<h3 style="box-sizing: border-box; margin: 0px; padding: 0px 0px 1rem; font-weight: normal; font-family: " segoe="" ui="" semibold",="" "segoe="" wp="" wp",="" ui",="" arial,="" sans-serif;="" font-size:="" 2rem;="" line-height:="" 1.3;="" color:="" rgb(51,="" 51,="" 51);="" background-color:="" rgb(255,="" 255,="" 255);"="">What is Right to Buy?

 

 

 

'Right to Buy' was first introduced 37 years ago to give people on low incomes the chance to get on the ladder.

The scheme meant that if a person had been a council or social housing tenant for three years or more, they'd be able to purchase their council home at a discounted rate.

The council would value the property and apply a discount, which would be dependent on how long the applicant had been a council or social housing tenant - most people qualified for the maximum discount - 60% for a house and 70% for a flat.

An added bonus was that in the scheme's early days - pre-credit-crunch - banks were lending out 100% mortgages - which made it even easier for tenants to buy - as they did not need a deposit. It was simply a case of swapping the monthly rent amount for a similar mortgage payment.

But since the eighties and nineties, Right to Buy has evolved hugely. The scheme longer exists in Scotland - the terms have also been revised across England and Wales.

Currently the maximum discount is £78,600 - or £104,900 in London - and in Wales the maximum discount is now only £8,000.

In 2015/16 there were 3,590 right to buy sales in London. The average market value of these properties was £229,000 and the average discount given was £97,000.

With house prices rising at an average 3.2% year-on-year according to Rightmove - that's a £7,328 profit in less than two years.

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