East London council, Barking & Dagenham, has launched its own version of right-to-buy to help those on low incomes gain a share in the property market whilst holding onto their all-important social housing stock.

Under a Right to Invest scheme Barking & Dagenham council will allow tenants buy a share in their local authority property using their right to buy discount. Tenants will be able to buy a stake of between 25% and 70% of their home depending on their right to buy discount and pay rent to the council on the remaining share.

The innovative scheme, which is thought to be a national first, will enable tenants priced out of the “ridiculously expensive” housing market to make that all important step towards home ownership.

The “Right to Buy” scheme for local authority tenants was first introduced in the early 1980s, and since then more than 2 million homes have been sold. In 2012 the Conservative government restructured the scheme, increasing the discount and extending it to include housing association tenants.

Barking & Dagenham currently owns 17,525 homes within its local authority area and has a waiting list of 7,494 on its housing register. Given the huge demand for local authority homes they are keen to retain as much of their social housing stock as possible but recognise that home ownership is something tenants aspire to.

Darren Rodwell, leader of Barking & Dagenham council, said: “London’s ridiculously expensive property market has meant the idea of home ownership for most ordinary people is just a pipe-dream.

“Barking and Dagenham has the lowest level of owner-occupation in London, so it is important that we help those on low incomes to get a foot on the housing ladder. This will also help create a stable community where no-one is left behind.”

The price tenants will pay for their share will be based on the open market value of the property, less their right to buy discount percentage. Should they then sell in the future they will receive the market value for their stake. During ownership, they will continue to pay the council rent pro rata on the share it still owns.

When it comes time to sell tenants will have to offer the council first refusal before they put their share to the open market. This way the council hopes to safeguard against their social housing properties ending up being owned by investors as around 40% of former council flats are now thought to be in the hands of private landlords.

The council has said that it has spoken to high street mortgage lenders and as the properties will have leases drawn up on them the lenders will be willing to offer standard loans on them.

Speaking about the need for this kind of innovative scheme Councillor Dominic Twomey, cabinet member for Finance, Growth and Investment, said: “At the moment we need to offer a shield to protect our residents from the continued effects of austerity, welfare reform and the damaging housing and planning bill’s ‘pay to stay’ which will hit many local families.”

Who is eligible for the Right to Buy scheme?

The Right to Buy scheme applies to eligible people renting an eligible house. The government has a comprehensive website that helps tenants work out if they can apply to the scheme and how much discount they can expect. Alternatively there are helplines to ring where advisors will talk tenants through the scheme.

It should be stressed that local authority tenants who are thinking of taking advantage of the Right to Buy scheme or Barking & Dagenham’s new Right to Invest scheme should be wary of companies offering to help them take advantage of the schemes – they are not impartial!

Recently the government has lowered the number of years you must be resident in your property from 5 years to 3 years and the scheme is only open to tenants who rent their only or main home from the local authority.

More information can be found at the government portal here – https://righttobuy.gov.uk/am-i-eligible/