How the budget will impact renters: what you need to know

This week’s budget brought some important changes for renters, especially those considering buying their council homes through the right to buy scheme.

The chancellor Rachel Reeves announced £500 million in new funding for the affordable homes programme (AHP), which aims to increase the number of affordable houses available.

Here’s a breakdown of what this means for renters.

What is right to buy?

Right to buy allows many council tenants to buy their homes at a discount. You can apply if:

it’s your only home

it’s a self-contained property

you’re considered a secure tenant (usually after living there for 12 months)

you’ve had a local council, housing association, or NHS trust as your landlord for at least three years (these don’t have to be three years in a row)

Concerns about right to buy

Since the scheme was introduced by Margaret Thatcher in 1980, there have been ongoing worries about it. According to the homelessness charity Shelter, only 4% of homes sold under this scheme have been replaced, while 43% of private renters on housing benefits live in homes bought through it.

Housing lists are longer than ever and there are 1.4 million fewer social homes than in 1980. Local councils are calling for an end to this “broken” scheme as the housing crisis worsens.

Impact on housing supply

The right to buy has led to a fall in social housing. Last year, around 6,000 council homes were sold, but only half were replaced.

The shortage is forcing more families into the rental market, driving rental prices up due to high demand.

What’s changing?

The budget included a cut in discounts for renters who want to buy their council homes. Previously, they could save as much as 70% off the price, but this will now be lower.

Reeves has said councils will be able to keep all the money from these sales to spend on new social housing.

What’s the affordable homes programme?

The AHP is a government scheme designed to increase the supply of affordable housing.

Affordable housing is housing that is considered affordable for people whose household income is at or below the average level set by the national or local government.

The AHP provides funding to local councils and housing organisations to build or acquire affordable homes for rent or purchase.

The chancellor announced an additional £500m for the AHP, which is expected to help build 5,000 new affordable homes, focusing on rental and ownership properties with an emphasis on social rent.

Reaction to the changes

Some housing campaigners support these changes. Councillor Louise Gittins from the Local Government Association (LGA) said these moves will help replace sold homes and reduce the loss of existing housing stock.

But some experts worry that the changes could make it harder for long-term renters to buy their homes.

Mortgage lender Ryan Etchells noted that many renters might face higher costs, making homeownership even tougher.

The National Residential Landlords Association also raised concerns. It warned that higher taxes on rental homes could seel half a million fewer rental homes over the next decade, leaving struggling tenants with limited options.

Call for more affordable housing

Polly Neate from Shelter says there’s an urgent need for genuinely affordable social homes.

With homelessness at record levels, she argues the government must invest in building more social housing to help families and reduce pressure on temporary accommodation.

“A chronic shortage of social homes combined with rocketing private rents is tearing communities apart – pricing families out of their local areas and pushing over 151,00 children into homelessness. Families are forced to live out of suitcases, stuck in grotty homeless accommodation for years.

“Building social housing saves the taxpayer money, boosts jobs, reduces the burden of poor housing on our NHS and, crucially, will end homelessness for good,” she said.

Gabrielle Pickard Whitehead

Gabrielle is an experienced journalist, who has been writing about personal finance and the economy for over 17 years. She specialises in social and economic equality, welfare and government policy, with a strong focus on helping readers stay informed about the most important issues affecting financial security.

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