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Right to Buy Social Mobility Fund: England

Last updated: 30 March 2015

At a glance

  • The Right to Buy Social Mobility Fund (RTB: SMF) helps eligible social tenants who are able to afford to exercise their Right to Buy, but are unable to do so because the social property in which they live is not suitable for their needs, or is difficult to mortgage.
  • Local council landlords can apply to government for an allocation of funding from an £84 million pot, to set up a local scheme to support their tenants to buy a newbuild property on the open market, with a one-off cash payment of £20,000 (or £30,000 in London) instead of their Right to Buy discount.
  • Local authorities can benefit by freeing up properties that can be allocated to new tenants.
  • Tenants must give up their social rented property when they receive the cash payment and cannot return to social housing if they still own a property bought with support from the Fund. 
  • The Fund is not open to housing association tenants who qualify for the Right to Acquire. 

CML position

Although we recognise the benefit of the scheme in helping to overcome barriers to some RTB applicants because of non-traditional property construction or design, which would not fit with lending policies, we are seeking clarification from DCLG on:

  • Whether the cash incentive is an unconditional outright payment or whether it is in some way secured against the property being purchased or treated as an unsecured personal loan.
  • Whether tenants will have to repay the incentive and, if so, in what circumstances
  • How the award is documented and recorded and how it may be evidenced to a lender or broker processing a mortgage application

We also urge local councils to follow a standard approach with model terms, conditions and documentation.  This will provide a consistent approach and provide certainty to lenders.

Why this is important for lenders

Payments under the scheme could help RTB applicants whose existing properties might not be suitable for a mortgage.  This can help circumvent some barriers to lending to RTB applicants, as a result of the non-standard design or construction of the property, or if it is on a high floor of a block.

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