The Right to Buy Scheme…
…allows council tenants to buy their properties at a big discount. This scheme was introduced in the 1980’s and allows you to apply to purchase your council house if you meet the following criteria:
- It’s your only home;
- Its self-contained – (you don’t share rooms with other people);
- Your landlord is the council or a housing association*;
- You have been a tenant for at least 3 years;
* Most housing association tenants do not have the Right to Buy, however if you were a secure council tenant and were living in your home when it was transferred from your council to a housing association, then you may have a ‘Preserved’ Right to Buy. If you are unsure if you were a secure council tenant you should contact your local council for further information.
When will I not be eligible?
- If you have legal issues with debt such as bankruptcy;
- You are subject to an outstanding possession order;
The right to buy scheme has also recently been phased out in both Wales and Scotland and is no longer available.
What discount could I get?
The longer you have been a council tenant the bigger the discount you will receive. The discount is taken from the current estimated market value of your home. The maximum discount is £82,800 or £110,500 in London.
The starting point for a house is a discount of 35% once you have been a tenant for 3 years. After 5 years this discount increases by 1% every year until you reach 70%. You will be eligible for the maximum discount of 70% after living in your council property for 40 years.
The position is different in relation to a flat and the starting point is a 50% discount after you have been a council tenant for 3 years. The discount then goes up 2% per year after 5 years as a council tenant, up to 70%. With a flat you will reach the maximum discount after living in your council property for 15 years.
*The maximum discount is subject to change and is amended each April.
How to start the process
- Ask the Council for a Right to Buy Form – RTB1 Form;
- If you are eligible the Council will make you an offer within 12 weeks;
- You have will then have a further 12 weeks to decide whether to accept the offer;
- In this time you should also instruct a solicitor and arrange a mortgage;
Options for Funding the Purchase
- Cash Savings;
A family member (or another individual) could help provide you with the funding for the purchase. Legal ownership however, can only be in the names of the eligible tenant. We recommend taking legal and financial advice before making any decisions in this regard.
Selling the property
As the owner of the property you can sell it whenever you like, however there are some pitfalls to be aware of before you take this step. Under the terms of the Right to Buy Scheme, if you sell the property within 10 years you must first offer the property back to the council/your old landlord who will then have the option to purchase the property at the current market rate.
It is important to also understand that if you sell your property within 5 year you will have to pay back a percentage of the discount. The percentage you are required to pay back will depend on when within the 5 years you sell the property. If you sell the property within the first year you will need to pay back all of the discount. The amount you have to pay back will then reduce by 20% each year as follows:
- Second Year = 80% of the discount
- Third Year = 60% of the discount
- Forth Year = 40% of the discount
- Fifth Year = 20% of the discount