Remortgaging a council house to buy another house

A neighbour's chain has broken because the buyer wasn't about to remortgage his council house for full market value. The buyer purchased his council house and subsequently tried to remortgage it to buy my neighbour's house.

How is this possible, I thought council houses were for those who were about to become homeless. This guy is going to have two houses: a discounted council house and my neighbour's house