In recent years the government’s Right to Buy scheme has grown, meaning that an ever-greater number of people who rent their council homes are eligible to purchase them.
A key advantage of the scheme is the inclusion of a generous discount on price, but who exactly can take advantage of Right to Buy and what rules and restrictions apply?
Who can use Right to Buy?
The Right to Buy scheme has been around for over 40 years and is pretty much focused on England, having been abolished in Scotland and Wales.
It is still running in Northern Ireland but the scheme will soon be greatly reduced there.
So what are the essentials you need to qualify?
You can apply to buy your council home if you meet these criteria:
The property you want to buy will be your only or main home
Your home needs to be self-contained, with no rooms shared with people from outside your household
You’ll need a legal contract between you and your landlord, making you a secure tenant
You’ll need to have had a public sector landlord for at least three years, although not necessarily three years in a row. A public sector landlord means a council, housing association or NHS trust
It’s important that you have no legal issues involving debt, such as a county court judgement
If you share your tenancy, you can still make a joint application, and you can also apply with up to three members of your family if you’ve lived together over the past 12 months.
How do you apply for Right to Buy?
There are four main steps you’ll need to take if you want to purchase your council property using the Right to Buy scheme.
Step 1. Firstly you’ll need to complete an RTB1 application form. If you follow this link, it will provide all the information you need and tell you what to do next.
Step2. Next, you need to send your completed RTB1 application form to your landlord. Print it, make sure you’ve signed it where necessary, and then send it off by recorded delivery to be sure that your landlord has received it.
Step 3. Wait for your landlord’s answer. They will need to let you know if they’re willing to sell within four weeks of your application, or eight weeks if they’ve been your landlord for less than three years. If the answer is no, the reason must be stated.
Step 4. If your landlord agrees to sell, they’ll send you an offer. This must be sent to you within eight weeks on freehold property, or 12 weeks if you’re buying a leasehold. The offer will include a range of important details, including a price and how it was worked out, your level of discount, a description of the property, estimates of any service charges for the next five years and any known problems with the property’s structure.
After you receive the offer, you’ll have 12 weeks to decide whether to proceed, and you can pull out of the sale and carry on renting if you change your mind.
What about financing your purchase?
Naturally, you’ll need to arrange a mortgage to buy your council home.
Do some research and find out which kind of mortgage suits your circumstances best. It would be a good idea to consult a professional financial or mortgage adviser before making your final decision, as this is a big step.
There are other costs to consider when becoming a homeowner too, such as repairs and maintenance — the kinds of things that were not your responsibility as a tenant.
Don’t forget that Stamp Duty is a tax you have to pay when buying property or land in England or Northern Ireland. The amount will be based on the price of your home.
The solicitor dealing with your purchase can help you with Stamp Duty and how much you’ll need to pay, or you could ask an expert financial adviser.
How much is the Right to Buy discount?
A key advantage of the Right to Buy scheme is the discount you can receive.
The size of your discount depends on whether you live in a house or flat, where in the country you live and how long you’ve been a public sector tenant.
For example, if you’ve been living in a house for between three and five years, you’ll receive a 35 per cent discount, so if your home is worth £200,000, with Right to Buy you could get £70,000 off, so that you’d actually pay around £130,000.
If you’ve been a public sector tenant for more than five years, your discount goes up by 1 per cent for each year over this point, up to a maximum of 70 per cent, or £87,000. In London, this maximum is £116,200.
For flats the figures are different. If you’ve lived in your flat for three to five years, you’ll get a 50 per cent discount, so if your property is valued at £140,000, you could buy it for nearer £70,000.
After five years as a public sector tenant, this discount increases by 2 per cent each year, up to a maximum of 70 per cent. As with houses, discounts are capped at £87,000 and £116,200.
Bear in mind that where your landlord has spent money on building or maintenance work, your discount may be reduced.
What restrictions can apply?
Sometimes you might not qualify for the Right to Buy scheme, because of the status of your home.
It might have been a council property that was sold to a different public sector landlord while you were living in it for example.
You might still be able to buy your home thanks to Preserved Right to Buy, but you’ll need to meet all the usual Right to Buy criteria in these circumstances.
You might not qualify for Right to Buy or Preserved Right to Buy. In this case, you may be able to apply for the Right to Acquire scheme. This allows many housing association tenants to buy at a discount, up to a maximum of £16,000.
Eligibility is very much like Right to Buy, with a couple of additional elements. Your property must have been built or bought by a housing association after 31 March 1997, or transferred from a local council to a housing association after 31 March 1997.
Take a look at Gov.uk for more details on how to apply.
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