Mayor of London Sadiq Khan will provide boroughs with funds to buy back council homes sold under Right to Buy.
The funds will form part of the £4.8bn Affordable Homes Programme 2016-23, while councils can bid for grants to either buy existing homes or build new ones, depending on what makes sense in the local area.
The Right to Buy policy was introduced under the Housing Act 1980 by Margaret Thatcher, enabling social tenants to buy properties at a discount.
But the policy is controversial, as it’s blamed for declining levels of social housing stock.
Right to Buy was relaunched in 2012 by then-Prime Minister David Cameron, but despite the vision to help owner occupiers on the ladder private landlords now own 40% of these homes.
Sadiq Khan said: “For more than 40 years, London’s precious council homes have been disappearing into the private sector, often never to be replaced. It’s time for that to change.
“In the midst of a housing affordability crisis it feels grossly unfair and unjust that more than one in four council homes sold through the Right to Buy in London are now in the hands of private landlords.”
Properties bought under the scheme must meet the Decent Homes Standard.
Mary-Anne Bowring, group managing director at Ringley, added: “There is a big question mark whether these homes should have been sold off in the first place without funding being provided to deliver replacement social housing but as buy-to-let investors look to exit the rental market this seems like a smart policy that will boost the supply of accommodation for low income households and the homeless.
“There is a broader debate to be had over whether the policies pushing private landlords to sell are wise given the number of renters is only set to increase.
“Build to rent can help meet some of this housing need but even in more mature markets like the US individual landlords still provide the mainstay of private rented accommodation.
“Fundamentally fixing Britain’s Housing Crisis involves delivering more homes at a range of price points and tenures, including both market and affordable rent as well as for sale.”