Right To Buy
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Right to Buy Scheme
On the mortgage and protection podcast this time, Lee and Neezum from Rebus talk us through the Right to Buy Scheme.
What is the Right to Buy Scheme and how does it work?
The Right to Buy Scheme is aimed at council and housing association tenants in the Uk, and allows them to buy their home for a heavily discounted rate If they’ve been renting a home from the council or a housing association for a number of years.
Who qualifies for the Right to Buy Scheme?
Any local authority tenants or housing association tenants in a property that was previously a council owned house, and it’s been transferred across. You have to have been a local authority tenant for at least three years, but that doesn’t need to be three continuous years, it can be three years collectively. So if you were living in a council house for a year and a half and then privately rented for a period of time, but went back into a local authority housing for another year and a half, you would still qualify for the scheme.
What’s the process if I do qualify for Right to Buy?
The first step would be speaking to a Mortgage Broker, to understand the costs involved with buying a home. You can check if you’re eligible through your local authority, and if you qualify, they will write to tell you the discount that you qualify for your specific property.
What’s the discount if you live in a house and if you live in a flat?
If you’ve lived in a house for anywhere between three and five years, you’re eligible for a 35% discount off the property value. If you have lived there for longer than five years, that discount increases by 1% for every extra year that you’ve been a local authority tenant, up to a maximum of 70% in total. This is capped outside of London at a maximum discount of £84,600. If you are inside London it’s £120,800.
For flats it’s very similar, the only difference is instead of 1% extra discount for every year above five years tenancy, It’s 2%.
Can I let out my Right to Buy property?
You can’t buy the property with the intention to let your property. You’d have to have resided in the property for a number of years post-purchase to consider doing anything like that. The purpose of the Right to Buy Scheme is to enable you to buy your own home to live in.
Can the council refuse my Right to Buy application for any reason?
You can be refused if you are deemed ineligible for the Right to Buy Scheme. For example, if you’ve had any issues with credit, such as legal issues with debt or any outstanding repossession orders.
If you’re applying with someone that isn’t eligible to buy the property with you, to be eligible, any joint buyers have to be on the tenancy agreement with you. It can be a spouse or a civil partner or up to three family members, as long as they’ve been living in the home for twelve months prior to making an application. It also needs to be their main residence.
Are there options if I’m refused by the council?
Being refused by the Right to Buy Scheme doesn’t mean you can’t buy a property. There are potentially other schemes available to you that will help you to get on the property ladder, like the Shared Ownership Scheme, which is helpful for people who have very small deposits.
The Help to Buy Equity Loan scheme could be another good option in terms of getting on the property ladder as well. So, if you are refused, don’t rule out exploring other options. Speak to a broker and they’ll help you identify what your alternative options are.
What does Right to Acquire mean?
There’s not too much difference to the Right to Buy Scheme. It’s the same principle, you can buy a property at a discounted rate, but the Right to Acquire is more specifically for housing association tenants, whereas the Right to Buy is for council tenants.
The eligibility criteria is the same, so if you’ve been renting for three years you can qualify for the Right to Acquire. It has the same sort of application process and everything and it’s all very similar.
What happens if there are delays with the application?
You have to be a little bit patient particularly if you’re applying for the Right to Buy Scheme, as it can take time in terms of getting your discount agreed. When you apply to the local authority, it can take time to understand whether you are eligible. Plan as early as possible to speak with a Mortgage Broker to understand the process.
There are set time limits that your landlord has to come back to you by, if you’re applying for the Right to Buy Scheme. Depending on how long you’ve been with that current Landlord, it’s currently either up to four weeks or up to eight weeks. If they don’t come back to you within those time limits, you can complete an appeal and and and ask for I think it’s called an initial notice of delay form, which you send to your landlord, and you can actually request a further discount off the price of your home.
They then have a month then to send you back a counter notice, which explains the reason for the delay and includes your offer. If they still don’t come back to you by then, there is a rule to say that any rent you pay whilst you’re waiting to hear from your landlord, can be deducted from the sale price.
Is there anything else to consider?
Many people who would like to consider using the Right to Buy Scheme, don’t believe that they have the right type of income, particularly if they’re on benefits. With the Right to Buy and Right to Acquire scheme, benefits are an acceptable form of income, so child benefit, child tax credits and other forms of support from the government can be used to support your mortgage application.
If someone who’s later in life has the opportunity to buy their property through the Right to Buy scheme, but their income doesn’t support the affordability needed, as long as all parties are in agreement, adult children or family members that fit the eligibility criteria can apply to buy with them to support their affordability. We can put those different scenarios to you and try to find a way that works.
We can also look at a variety of credit scores, so even if you don’t think it’s worth applying, having an initial discovery call to see if you are eligible is highly recommended, because you can be pleasantly surprised.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.