The Right to Buy system, launched by Margaret Thatcher, has seen a 400% increase in fraudulent purchases over the last two years.
The research, published by the Audit Commission, showed how the scheme is open for exploitation throughout the country. The rise in the number of fraudulent cases comes after the large increase in the amount of discount individuals qualify for. The cases from April 2012 to March 2014 were worth £12.3 million in total.
The government scheme, which has been about for over 30 years, has helped over 250,000 individuals in London get on to the property ladder. Now, with the discount up to £100,000 it is likely to appeal to even more buyers in the capital.
One fifth of those who bought their council house in Westminster, using the scheme, were receiving housing benefit during the application process. The worry comes that tenants may be receiving financial incentives by private landlords to purchase the property at a reduced price.
There are huge profits to be made from these former council houses, with some owners letting them at a higher price, or re-selling them for over £1 million.
As London properties remain at a high, one fear is that the Right to Buy scheme is becoming a vulnerable alternative.
Green Assembly Member Darren Johnson, voices his concerns:
“A lot of council homes sold today will be in the hands of private landlords tomorrow. Fewer low-rent homes will drive more low paid people out of inner London. The mayor should lobby for it to be scrapped, and for councils to be allowed to borrow to invest in building many more.”
Article By: Ratchelle Deary, Marketing Executive at Contractor Mortgages Made Easy
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