Right-to-buy move to cost Lothians councils £6m

Margaret Thatcher hands over the deeds to a house in 1980. Picture: PA
Margaret Thatcher hands over the deeds to a house in 1980. Picture: PA
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SCRAPPING tenants’ right to buy will cost councils in Lothian more than £6 million a year in lost revenue from house sales and force them to borrow more to build new homes or even put up rents.

Edinburgh, Midlothian and West Lothian all back abolition of the controversial policy introduced by Margaret Thatcher in 1980, while East Lothian says it wants alternative schemes to promote home ownership.

But in detailed submissions to the Scottish Government consultation they provided ­candid assessments of the ­financial impact of the move.

Deputy First Minister Nicola Sturgeon announced earlier this month that the right to buy would be ended altogether for council and housing association tenants in Scotland by 2017.

She said the policy switch would safeguard up to 15,000 homes for future generations and help to ease pressure on the social rented stock.

In Edinburgh, 25,935 council properties were sold under the scheme – more than half the city’s housing stock – when the policy was introduced.

In its response to the government consultation, the city council backed abolition, but estimated it would lose £2.8m in the first year from houses no longer being sold under right to buy (RTB).

It said: “The income from RTB sales is currently used to fund housing investment and the development of new homes.

“A reduction in capital ­receipts will mean that the council would have to borrow more money to fund capital ­investment.

“At current rates the cost of borrowing an extra £2.8m would be approximately £230,000.

But finance convener ­Alasdair Rankin said rental ­income retained by not selling houses should cover the cost of the ­extra borrowing.

In its consultation response, East Lothian Council said it would see a significant reduction in asset sales as a result of the right to buy being scrapped.

It said: “Current RTB sales generate around £1m per annum in receipts which is reinvested in the housing stock.”

And it warned the consequence of ending RTB would be to restrict future investment or to increase rents, particularly in the short term. Midlothian said the right to buy had taken a disproportionate amount of the better housing stock out of the social rented sector, creating a shortage which was only partly offset by new-build.

It backed scrapping RTB but said sales of council properties had fallen substantially and made “no material difference” in the local authority’s capital funding investment decisions.

West Lothian Council also supported abolition but its response to the consultation said its housing investment programme would have to be “revisited” if RTB was scrapped.

A spokesman said: “West Lothian Council’s approved housing capital programme for years 2013/14 to 2017/18 includes annual receipts from council house sales of £2.5m per year.

“We will continue to monitor developments with RTB ­legislation and will update our plans accordingly.”