Right to Buy Overhaul: Government Announces Tighter Rules and Greater Protections for Council Homes

Spotlight

Written by Kim Parsons

29/8/25

The UK Government has announced a major overhaul of the Right to Buy scheme following an extensive consultation period, introducing stricter eligibility requirements, reduced discount levels, and a series of new protections aimed at reducing abuse and giving local authorities greater ability to retain and replace their housing stock. These reforms, set to be phased in from 2026–27, mark one of the most substantial changes to RTB policy in over a decade and represent a significant shift in tone, one that places long-term planning, sustainability, and accountability at the heart of homeownership policy in the social housing sector.

At the centre of the proposed reforms is a clear ambition to slow the rate at which council homes are lost through Right to Buy, while also tightening oversight and simplifying the scheme for tenants and landlords alike. A major headline from the announcement is the extension of the tenancy requirement before a tenant can become eligible to purchase their council property. Currently, tenants qualify after just three years of occupation, a threshold that has long been criticised for enabling rapid turnover and undermining the long-term stability of social housing stock. Under the new model, tenants will need to have lived in their property for a minimum of ten years before they can apply to buy it, reflecting a policy shift that prioritises long-term residency and discourages speculative use of the scheme.

Alongside this, discount levels are being recalibrated to reflect the increased threshold for eligibility. Discounts will now begin at just 5% after ten years of tenancy and will rise gradually each year, capped at 15%. This is a significant departure from the previous structure, where tenants could access discounts of up to 70% with only a few years of tenancy. The rationale here is twofold: to reduce the fiscal burden of RTB discounts on councils and to reinforce the principle that such schemes are a reward for long-term tenancy, not a fast track to cut-price property ownership. Government sources have stated that this simpler and more transparent structure should make the system easier for tenants to navigate, while also addressing concerns over exploitation of the scheme and reducing incidents of fraud.

Another major feature of the reform is the introduction of a 35-year exemption period for newly built social housing. This policy is aimed squarely at protecting the long-term supply of affordable homes by ensuring that local authorities and housing developers have certainty that new homes built for social rent will not be sold off prematurely. The ability to plan with confidence has been a long-standing concern for local authorities, many of whom have highlighted the perverse incentives created by the existing system, where new homes could be sold under RTB within a few years of construction. By effectively removing new homes from RTB eligibility for over three decades, councils will have greater freedom to invest in stock growth without the threat of rapid depletion.

Further strengthening of protections includes a doubling of the current five-year limit for clawing back discounts in cases where properties are resold. Under the new rules, if a tenant resells their RTB home within ten years of purchase, the local authority will be able to reclaim a portion of the discount originally granted. Additionally, councils will retain the right of first refusal on all RTB homes if they come back on the market, with this right extended indefinitely. These measures are aimed at curbing the practice of short-term resale and ensuring that former council homes can be returned to public hands where appropriate.

Perhaps the most widely welcomed aspect of the overhaul is the decision to allow councils to retain 100% of receipts from RTB sales and combine these with other sources of grant funding to build replacement homes. Under the current model, strict conditions around how and when these receipts could be used, alongside an unrealistic one-for-one replacement target have often prevented councils from replacing the homes sold through RTB. The new approach abandons the rigid replacement target and instead focuses on providing local authorities with the financial tools and flexibility needed to deliver more homes on their own terms. While the government has stopped short of setting a formal replacement ratio, it has made clear its expectation that local authorities should aim to exceed one-for-one delivery wherever possible.

Reaction from the housing sector has been broadly supportive, albeit with cautious optimism. Many housing providers and local authority groups have welcomed the shift in emphasis towards protection and long-term planning, particularly the recognition of how damaging the current version of the scheme has been for maintaining housing stock levels. The ability to invest receipts locally and align them with strategic development plans is seen as a significant step forward, as is the clarity around exempting new homes from the RTB framework. However, some sector leaders have noted that the true test will lie in the implementation. Timelines for the rollout of the reforms remain uncertain, and questions remain about how replacement targets will be monitored and whether further support will be offered to ensure councils can meet local housing demand in practice.

In summary, the overhaul of the Right to Buy scheme represents a rebalancing of priorities. While the principle of offering tenants a pathway into homeownership remains intact, the new model places much greater emphasis on sustainability, fraud prevention, and housing supply resilience. By extending eligibility timelines, reducing discounts, protecting newly built homes, and offering councils full control of sale proceeds, the reforms attempt to address the long-standing structural weaknesses that have eroded social housing availability across the UK. Whether these reforms will be enough to reverse decades of declining council housing stock remains to be seen, but they signal a more cautious, measured approach to one of the most politically charged housing policies of the last 40 years.

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