A guide to the Right to Buy Scheme

If you’re a council-house or housing-association tenant, you might be able to buy your home from your landlord at a discounted price. We take a look.

If you’re a council-house or housing-association tenant, you might be able to buy your home from your landlord at a discounted price. We take a look.

Tobi Owens
From the Mortgages team
6
minute read
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Posted 2 DECEMBER 2020

What is Right to Buy?

Right to Buy is a government scheme that helps council and housing-association tenants in England buy their home outright, by offering discounts of up to £84,200 (or £112,300 in London).

How much discount could I be eligible for?

It depends on where you live, how long you’ve been a tenant and whether you live in a house or a flat. The maximum discount to April 2021 is as follows:

  • £112,300 – London
  • £84,200 – elsewhere in England
  • £24,000 – Northern Ireland

The Right to Buy scheme is no longer available in Scotland or Wales.

The longer you’ve been a tenant, the bigger your discount could be, as it increases each year in line with inflation.

There are also different discount levels for houses and flats, depending on how long you’ve been a tenant:

House

  • 3-5 years – 35% discount
  • 6 years+ – an increase of 1% per year, up to a maximum of 70% or the cash maximum available, whichever is lower

Flat

  • 3-5 years – 50% discount
  • 6 years+ – an increase of 2% per year, up to a maximum of 70% or the cash maximum available, whichever is lower

Did you know?

The money raised from the sale of properties under the Right to Buy Scheme goes towards building new council housing for rent.

Do I qualify for Right to Buy?

You could qualify for Right to Buy if:

  • You’ve been a council or public-sector tenant for three years. Your landlord must be the council, a housing association, NHS trust or another public-sector body
  • You intend to use your home as your main residence
  • The property isn’t shared with others – in other words, it’s self-contained

Can I make a joint application?

You might be able to make a joint application for Right to Buy with:

  • someone who shares your tenancy
  • a spouse or civil partner
  • up to three family members, but you’ll need to have lived together for at least a year

If you’re buying with someone else, you count the years of whoever’s been a public sector tenant the longest to work out the discount you may be entitled to.

Do I have a Right to Buy if I’m a housing association tenant?

If you live in an ex-council home and the council sold the property to a public-sector landlord while you were living there, you could still qualify under what’s known as a ‘Preserved Right to Buy’. This means you’ll have the same discounts as Right to Buy council tenants.

If you don’t have a Preserved Right to Buy, you may still be able to buy your property under the Right to Acquire scheme, but the discounts offered are much, much lower.

Under the Right to Acquire scheme, the discounts vary from £9,000 to £16,000, depending on where you live. For example, in Brighton and Cambridge it’s £16,000 – whereas in Norfolk or Tyne and Wear its £9,000.

To find out what it would be for where you live, see a list of Right to Acquire discounts by location.

In order to be eligible, you must have been a housing association tenant or had another public-sector landlord such as the armed services or NHS for three years. In addition to this, the property has to be eligible too. Your home must be:

  • built or bought by a housing association after 31 March 1997 (and funded through a social housing grant provided by the Housing Corporation or local council)
  • transferred from a local council to a housing association after 31 March 1997
  • self-contained and your main or only home

If you’re not sure about either of the first two, check with your housing association. They should be able to help.

However, there are plans to extend Right to Buy to housing-association tenants. A pilot scheme for this is running in the Midlands and will be evaluated later in 2020, so it might be worth waiting if you want to see if you could qualify for the larger Right to Buy discounts.

Check out the government’s website for updates on Right to Buy changes that could affect you.

When might I not qualify for Right to Buy?

You might not qualify for Right to Buy if:

  • You have large debts or have been declared bankrupt
  • You’ve been threatened with eviction
  • Your home is reserved for older or disabled people
  • There’s a shortage of housing in your area

How do I find out if I’m eligible for Right to Buy?

If you’re not sure whether you’d be eligible or not for the Right to Buy scheme, you can complete the government’s Right to Buy eligibility quiz.

If you prefer, you could also talk to an official Right to Buy adviser, who can take you through the quiz and answer any questions about eligibility, discounts and the application process.

Just be aware that your eligibility needs to be confirmed by your landlord.

How do I apply for Right to Buy? 

You’ll need to fill in an RTB1 Right to Buy application form and send it to your landlord.

Your landlord must reply within four weeks. If they refuse to let you buy, they must explain their decision.

If the answer is ‘yes’ they’ll then need to send you an offer letter that includes a valuation and purchase price. If you’d like to challenge the valuation, you can get an independent view from the Valuation Office Agency from HM Revenue & Customs.

You’ll have 12 weeks to decide whether to go ahead and buy your home or not. Alternatively, you can pull out of buying the property and carry on renting.

What costs are involved with buying my home?

There are several costs involved with buying a home. You may need to consider:

  • Arrangement fees if you’re taking out a mortgage 
  • A deposit – although some lenders will accept the discount as a form of deposit
  • Mortgage booking fee
  • Solicitor’s fees
  • Valuation fee
  • Survey fees
  • Land Registry fee to register you as the new owner
  • Depending on the price you pay for your property, you may also have to pay Stamp Duty

You’ll also need to think about the ongoing costs that will occur once the sale goes through:

  • Mortgage repayments – use our mortgage calculator to work out how much you could borrow and your monthly repayments based on the interest rate and mortgage term length
  • Upkeep costs – if you buy a leasehold flat you’ll need to factor in ground rent and a service charge for the upkeep of the property
  • Home insurance – mortgage lenders typically insist you have buildings insurance in place as part of the mortgage agreement. if you buy your council house as a freehold, you’ll be responsible for taking out adequate cover. If the property is leasehold, the council will arrange buildings insurance that will be included in your annual service charge. If you want protection for the items in your home, you’ll also need contents insurance.

Can I sell my home?

Yes, you can sell your home at any time. However, if you sell within the first five years of purchase you may have to pay back some or all of the discount.

If you sell within the first year, you’ll have to pay back the whole discount. The proportion you’ll pay back decreases each year after that, up to five years:

  • In the second year – 80% of discount
  • In the third year – 60%
  • In the fourth year – 40%
  • In the fifth year – 20%

If you sell your Right to Buy property after five years, you won’t have to pay any of the discount back.

However, if you do sell within the first 10 years, you have to offer your property to your landlord or another council in the area at the full market value. If they don’t accept your offer within eight weeks, you can put your home on the open market.

Compare mortgages 

If you decide to proceed with the Right to Buy scheme, then it’s likely you’ll need a mortgage to pay for your home. Our mortgage calculator is a simple-to-use tool that can help you work out how much you could borrow.

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