What is Right to Buy? Own your Council Home
Right to Buy is a government scheme that offers tenants the opportunity to purchase their council home at a discount. In this guide, Latest Deals explains how Right to Buy works, how to use a Right to Buy calculator, how to apply for the Right to Buy discount and answers any questions surrounding the scheme.
How does Right to Buy work?
If you’re eligible, you can purchase your council home at a discounted price using the Right to Buy scheme. If you are a public sector tenant and you want to buy your home, the first step is to check to see if you qualify for the Right to Buy Scheme.
Are you eligible for the Right to Buy Scheme?
You’re eligible to buy your home using the Right to Buy scheme if:
- It is your sole, or main residence.
- It is self-contained.
- You’re a secure tenant (this means that you can live in the property for the remainder of your life, providing you don’t break any of the clauses of the tenancy agreement).
- You’ve been a public sector tenant for at least three years. A public sector landlord may include the council or an NHS Trust. It’s worth noting that the three years don’t need to be consecutive.
What is a council house?
A council house is a property owned by the council and rented out to tenants. Known as public housing, council homes can be houses or flats that are rented out to those who are unable to afford to rent privately.
If you rent a council house or flat, you are what’s called a public sector tenant. As a public sector tenant, you rent your home from a public sector body, such as your local council or an NHS Trust, and they act as your landlord.
Can you afford to buy your council home?
First, you should determine whether you can afford to purchase your council home. If you decide to buy your council property, it is your responsibility to make sure that you can cover the expenses, including mortgage payments, solicitor fees, stamp duty, maintenance costs and so on.
Right to Buy discount
If you’re eligible, you can get a percentage discount on the market value of the property you’re purchasing.
The Right to Buy discount you’ll qualify for depends on:
1. The location and value of the property
The Right to Buy discount you get is a percentage of the price of the property you’re buying. So, the higher the value of the property, the bigger the discount you’ll get. There are maximum limits that control the discount.
The maximum Right to Buy discount you can get is £84,000 in England, however, if you’re purchasing a home in a London borough, this can increase to £112,800. This limit increases annually in line with the Consumer Price Index (CPI).
2. How long you have been a public sector tenant
You will get a higher discount depending on how many years you have been the tenant of a public sector landlord (such as your local council, or an NHS Trust). These years do not need to be consecutive, and if you’re buying the property with someone else, the person with the highest number will be counted.
3. The type of property you’re purchasing
Under the Right to Buy scheme, you’ll get a different discount rate depending on whether you’re buying a house or flat.
If you’re buying a house and you’ve been the tenant of a public sector landlord for three to five years, you can get a discount of 35%.
For tenants of more than five years, this will increase 1% for every extra year. So, for example, if you have lived in a council house for 7 years, you could get a Right to Buy discount of 37% of the market value of the property.
There is a top limit of 70% for this discount, or £84,000 in England and £112,8000 in London boroughs.
If you’re buying a flat and you’ve been the tenant of a public sector landlord for three to five years, you can get a discount of 50%.
If you’ve been the tenant of a public sector landlord for more than five years, this discount will increase 2% for each extra year. So, for example, if you’ve lived in a council flat for 7 years, you could get a Right to Buy discount of 54% of the market value of the property.
There is a top limit of 70% for this discount, or £84,600 in England and £112,800 in London boroughs.
Right to buy calculator
If you’re thinking of using the Right to Buy scheme to buy your home, you can use a Right to Buy calculator to get an idea of the discount you could receive.
Latest Deals recommends using the government’s Own Your Home: Right to Buy Calculator.
All you need to do is fill in the necessary information, such as the number of years you’ve been a public sector tenant, your postcode and so on, and you will receive an estimate of the discount you may be eligible for.
IMPORTANT NOTE: It’s important to note that this is only an estimate. You need to input an estimated property value when filling in the Right to Buy calculator, so the discount you get will vary depending on the actual property value. You can use websites such as Zoopla or OnTheMarket to get a property value estimate, or you could talk to an estate agent.
If your landlord has spent money improving or maintaining the property, you may be eligible for less discount. If the landlord has spent more money than the property is worth, you won’t get a discount, and the discount will be reduced if the landlord has spent money on the property:
- In the last ten years (if the landlord bought or built the property before 2nd April 2012)
- In the last fifteen years (if you’re purchasing the property through the Preserved Right to Buy, or the landlord built or bought the property before 2nd April 2012)
Right to Buy UK
Right to Buy application
Follow these steps to begin your Right to Buy application.
- Complete the Right to Buy application form (RTB1).
- Once you’ve completed the form, you need to send it to your landlord.
- Then, your landlord has four weeks to review it and respond. If they’ve been your landlord for less than three years, they have eight weeks to get back to you with an answer.
- Your landlord may agree to sell you the property and make you an offer, and this must be made within eight weeks of their approval for a freehold property, or within twelve weeks for a leasehold property. This is a Section 125 Notice.
If the landlord says yes, they will make you an offer. This will include the following information:
- The cost of the property, and how it was established
- Your discount, and how it was calculated
- A summary of the house or flat, and any land it comes with
- Information on any service fees or charges associated with the property, for the first five years
- Any known structural problems with the property
Once you have received the offer from the landlord, you have twelve weeks to decide whether you want to move forward with the purchase. If you don’t reply to the offer, you will be sent a reminder, and then you have a further 28 days to get back to the landlord. If you still don’t give them an answer, the landlord can then drop your application.
The Right to Buy scheme operates on a strict timeline, and if your landlord fails to meet a deadline, you may be eligible for a reduction on the property’s sale price. You would need to fill in an Initial Notice of Delay form, and send it to your landlord.
IMPORTANT NOTE: If you reply to the landlord and decide to move forward with purchasing your home, you can pull out of the sale at any time before you exchange contracts, and continue to rent.
If you think that your landlord’s offer is too high, you can contact them and explain why. You must do this within three months of receiving the initial offer, and request an independent evaluation on the property. An HMRC valuer will then come and give you an impartial evaluation, and you have twelve weeks to agree to their price, or pull out of the sale.
You can make a joint application if you want to purchase a council home with someone else, though there are a few stipulations.
Joint applications can be made with:
- Someone already sharing your tenancy
- Up to three members of your family, providing they have lived with you in the past year. They do not need to be on the tenancy agreement
Residents of ex-council homes may qualify for the Preserved Right to Buy scheme. If your home was sold to a housing association while you were residing in it, you can contact your landlord for more information.
If your home was sold by the council before you moved in, you could be eligible to purchase your home through the Voluntary Right to Buy Pilot scheme.
Certain homes are not accepted for the Right to Buy scheme, including those that are suitable for elderly tenants. If your Right to Buy application is rejected because the property is equipped to house the elderly, you can appeal to a tribunal. You must appeal within 56 days of your application being turned down, and you can find out more information on how to appeal here.
Right to Buy Mortgage
If you decide to buy your council home, you will most likely need to apply for a mortgage to help finance the purchase. You will need to go through the same application process as any other buyer to get a mortgage. You can read our guide on What is a mortgage, and you can assess your options with our guide on types of mortgages.
Before making the decision, it’s important to look at all the costs associated with buying a home. As well as mortgage payments, there will be Stamp Duty and solicitors fees, living costs and so on. You can read our First-time buyer mortgage guide.
If you’re buying a flat, you may also need to pay service charges as a leaseholder, to cover building and land upkeep. You will also no longer be eligible for housing benefit if you buy a property, so it’s important to weigh up all of these factors.
Right to Buy selling rules
If you buy your home using the Right to Buy scheme, when you come to sell there are a few things you need to bear in mind.
If you sell the property in the first ten years of buying it, you need to contact your former landlord, or another local public sector landlord, and offer it to them to buy first. The property can be sold at the full market price, and if the landlord does not agree to the purchase within eight weeks, you can sell the home to anyone.
Paying back the discount
If you sell the property within five years of buying it, you will also need to repay all, or some of the discount.
|Year Sold||% of the discount|
The percentage you pay back will be on the property’s current value, the price that you’re selling it for.
So, if you bought the property for £100,000 and got a Right to Buy discount of 40%, that’s a discount of £40,000. If, after three years you decide to sell the property, and it has increased in value to £125,000, 40% of that would be £48,000. You would have to pay back 60% of this, £28,800.
IMPORTANT NOTE: You may not need to pay back the discount if you pass ownership of the home to a family member. This will first need to be agreed with the landlord, and then drawn up by a solicitor.
If your home is located in a rural area and you used the Right to Buy scheme to purchase it, there may be some limitations on who you can sell your home on to. If the property is located in a national park, in an area of outstanding natural beauty, or in an area deemed ‘rural’ by the Right to Buy scheme, there may be guidelines on who is eligible to buy from you. You can find out more about this here.
Right to Acquire
Currently, the Right to Buy scheme offers a discount for those buying public sector owned properties. If you live in a home owned by a housing association that was previously owned by the council, you may be able to purchase it through the Right to Acquire scheme. As with Right to Buy, if you’re eligible you can get a discount on the property you’re buying, however, it will be a much smaller discount. The maximum discount limit for Right to Acquire is £16,000.
However, plans are in place for the Right to Buy discount structure to be enhanced to include all housing association tenants. So, if you can put off buying your housing association property until this happens, it’s worth waiting. You may qualify for a much better discount if you do.
If waiting isn’t an option for you, you may be eligible to buy your property through the Right to Acquire scheme. To qualify, you should have resided in public sector housing for at least three years. The property also needs to have been built after 1997 (or have been transferred to a housing association after 1997). You can find out more about the Right to Acquire scheme here.
Right to Buy advice
If you’re considering buying your home with the Help to Buy scheme, it’s a good idea to seek advice before taking the first step. You can get free advice from the council about your eligibility, how to complete the application, the costs involved, and whether it’s the right move for you. Contact your local council here.
You can also contact the Right to Buy Agent service, which offers free advice about the scheme. You can email them at: firstname.lastname@example.org