Right to buy rules 'restricting councils replacing homes sold under scheme'
Less than 20% of homes sold under the right to buy (RTB) scheme were replaced by councils last year, new figures show.
The Local Government Association said 12,246 council homes were sold to tenants under RTB in England in 2015/16 with just 2,055 replacements started by councils - a drop of 27% on the previous year.
It blamed the widening gap on the complex rules of the scheme, such as only one-third of the sale price being returned to local authorities.
Local government leaders warned this drop in the number of much needed council homes would exacerbate the housing crisis, increase homelessness and housing benefit spending, at a time when there were 1.4 million people on council housing waiting lists.
The scheme, introduced by Margaret Thatcher's government in the 1980s, was scrapped in Scotland last month and is being reconsidered in Wales.
Councillor Nick Forbes, LGA senior vice chair, said: "Current RTB arrangements are restricting councils from being able to replace homes being sold under the scheme.
"RTB will quickly become a thing of the past in England if councils continue to be prevented from building new homes.
"Housing reforms that reduce rents and force councils to sell homes will make building new properties and replacing those sold even more difficult.
"Such a loss in social housing risks pushing more people into the more expensive private rented sector, increasing homelessness and housing benefit spending."
The LGA, which represents more than 370 councils across England and Wales, forecasts that 66,000 council homes will be sold to tenants under the existing RTB scheme by 2020 but fears councils will struggle to replace the majority of them.
To make the scheme work in England, councils want the ability to borrow money to invest in housing, to retain 100% of receipts from sales, and be given extra funding to build replacements.
Council leaders also want the Government to make the forced sale of high value council homes voluntary.
RTB discounts should also be set locally to reflect the cost of houses in the area, the LGA said.
A spokeswoman for the Department for Communities and Local Government said councils have three years to use the money received from an RTB sale to build a replacement home.
She said: "However, we have always been clear that if local authorities don't start building replacement homes within the three-year deadline, then we will step in and build them for them."