Summary: Housing Secretary Steve Reed has stated that it is more effective to invest taxpayer money in building new homes rather than subsidising buy-to-let landlords through housing benefits. The government is reforming the Right to Buy scheme to protect social housing stock and introduce a 35-year exemption on new-build social homes from resale under the scheme.

Better to build new homes than subsidise BTL landlords, claims Housing Secretary

In a recent speech to the Lloyds Social Housing Forum, Housing Secretary Steve Reed criticised the current system where taxpayers effectively subsidise private landlords who rent out homes originally built with public funds. He highlighted the unintended consequences of the Right to Buy scheme, which has allowed council homes to be sold and then rented out privately at significantly higher rents, with housing benefit covering the difference.

Subsidising private landlords through housing benefits

Mr Reed explained that over a million families remain on council housing waiting lists, while the housing benefits bill has nearly doubled since 2010. He said: “Taxpayers pay tens of billions in benefits to subsidise private landlords to rent out homes that taxpayers also paid to build.”

He added that more than 40% of homes sold under Right to Buy are now privately rented, often at two to three times the rent previously charged when the properties were council-owned. The government’s approach aims to reduce this by focusing on building new homes rather than continuing to subsidise buy-to-let landlords.

Reforms to the Right to Buy scheme

The government has announced several changes to the Right to Buy scheme, including increasing the minimum eligibility period for tenants from three to ten years before they can apply to purchase their home. Discount rules will also be adjusted, starting at 5% of the property’s value and increasing by 1% each year up to a maximum of 15% or the cash cap, whichever is lower.

Additionally, a 35-year exemption will be introduced for new-build social homes, preventing their sale under Right to Buy until 35 years after completion. These measures aim to protect the social housing stock and prevent newly built homes from being quickly sold off.

Meeting the Decent Homes Standard by 2035

Mr Reed also announced plans to consult on extending the Right to Manage to housing association tenants, which currently only applies to leaseholders and council-managed homes. Furthermore, the government intends to enforce the Decent Homes Standard across both private and social landlords by 2035, providing long-term regulatory certainty for the social housing sector.

Practical support for TLA members

As the government introduces reforms affecting social housing and the private rented sector, landlords may need to review their property portfolios and tenancy arrangements to adapt to these changes. TLA membership offers access to practical information, compliance resources and document support that can assist landlords in navigating evolving housing policies.

TLA is currently BETA testing ORBIT™, its new property management and compliance platform designed to help landlords organise their portfolios, manage important documents and keep track of compliance activity. This platform may prove useful for landlords seeking to stay informed and prepared amid regulatory updates.

Members can explore relevant guidance and support to better understand the implications of Right to Buy reforms and housing benefit subsidies. Exploring TLA membership and learning more about ORBIT™ BETA access can provide landlords with tools to manage their properties effectively in a changing housing landscape.