If you live in a council house but would like to buy your home, the Right to Buy Scheme could be for you. The Right to Buy Scheme is an initiative set up by the UK government to allow council tenants to buy their property at a discounted rate. This not only helps you get your foot on the property ladder, but will mean you can save a lot on pesky moving costs.
The scheme isn’t for everyone and there are a few requirements you’ll need to meet, but if you’re considering taking the jump, read on and we’ll tell you everything you need to know.
Why consider the Right to Buy Scheme?
When renting long-term, it’s easy to consider your property as your home. Having said this, when you rent from the council, you don’t actually own the property. This can have a number of drawbacks, but isn’t ordinarily a problem if you’re not in a financial position to buy. If however, over time your circumstances change for the better, you may start to consider getting onto the property ladder. If this is the case, you may not necessarily wish to leave your existing home behind.
This is where the Right to Buy Scheme comes in. The scheme allows you to buy your council home with a significant discount.
This means, you’ll be able to get your foot on the property ladder, save money on your mortgage and give you the freedom which comes with home ownership, all while remaining in your existing property.
Who can apply for the Right to Buy Scheme?
Most council tenants in the UK are eligible for the Right to Buy Scheme, though it’s worth noting that there are different rules for those in Wales, Scotland and Northern Ireland.
You can apply for the Right to Buy Scheme if:
- Your council house is your only or main home
- Your property is self-contained
- You’re a secure tenant
- You’ve had a public sector landlord (e.g. a local council, housing association or NHS trust) for 3 years – this doesn’t have to be 3 years in a row
It’s possible to make a joint application with someone who shares your tenancy, or with up to 3 family members who have lived with you for the past 12 months (even if they don’t share your tenancy).
You can find out if you’re eligible for the Right to Buy Scheme here.
What are the discounts available from the Right to Buy Scheme?
Now that you know whether the Right to Buy Scheme is a good fit or not, it’s time to look at how much you can actually save on the cost of your new home.
The discount is based upon the market value of your property at the time you come to buy it, though there are a number of other contributing factors that are considered.
The maximum discount available in England is £84,600, though this is extended to £112,800 in London. This discount does increase each April in line with the Consumer Price Index, so it might be worth considering this when choosing when to take advantage of the scheme.
The contributing factors which will determine how much discount you receive are:
- How long you’ve been a council house tenant
- Whether you’re buying a flat or house
- The value of your home
If you are submitting a joint application, it’s the length of time of whoever’s been a council tenant the longest which counts.
There are a few caveats which need to be considered too. If you sell your home within 5 years, you’ll have to pay back some of the discount you’ve used. Additionally, if you’ve bought a property with the Right to Buy Scheme in the past, you will be offered a smaller discount amount.
If you want to find an estimate of the amount you’ll save when buying, the Government’s Own Your Home site has a handy calculator which can help.
Right to Buy Scheme discount for houses
If you’ve been a council tenant for between 3 and 5 years, you’ll receive a 35% discount on the value of your property.
After 5 years, this discount will rise by 1% each year you’ve been a council tenant. For example, if you’ve been a council tenant for 10 years, you’ll receive a 40% discount.
The discount is capped at 70% or £84,600 (£112,800 for London), whichever figure is lower.
Right to Buy Scheme discount for flats
The discount percentage for flats is higher. If you’ve been a council tenant living in a flat for between 3 and 5 years, you’ll receive a 50% discount on the value of your property.
After 5 years, this discount will increase by 2% each year. For example, if you’ve been a council tenant living in a flat for 10 years, you’ll receive a 60% discount.
The same discount caps that apply to houses also apply to flats, meaning the maximum you’ll be able to save on your property is 70% discount or £84,600 (£112,800 for London), depending on whichever figure is lower.
How to apply to the Right to Buy Scheme
Once you’ve decided whether the Right to Buy Scheme is right for you, you’ll need to submit an application form to your landlord.
Once you’ve completed this form, send it across to your landlord. They’ll have to reply to you within 4 weeks (though this will be 8 weeks if your landlord has changed in the last 3 years). If your landlord rejects your offer to buy, they’ll need to provide you with an answer as to why this is.
Once your landlord agrees to sell, they’ll send you an offer letter within 8 weeks of saying yes if you’re buying a freehold property. This can be up to 12 weeks if you’re buying a leasehold property.
The offer letter you receive will have a number of elements to it. These include:
- The price of your property and how this was worked out
- The discount you’ll receive through the Right to Buy Scheme
- A description of the property and land included
- A 5 year estimate for the service charge if you’re buying a flat
- Any issues with the property’s structure e.g. subsidence or mould
Remember: You have 12 weeks to respond to your landlord after you receive their offer letter, if you don’t respond the offer may be rescinded.
If you disagree with the valuation of your property within your landlord’s offer letter, you can request for an independent valuation to take place. This independent valuation will be undertaken by a district valuer from the HMRC.
Remember to consider all options
Buying a home is a big commitment to make. You should consider all options when going through this process. It’s worth remembering that there are plenty of commitments, additional costs and responsibilities that go hand-in-hand with home ownership.
If you do get cold feet at any point, you can withdraw your application and continue on renting without any issues.
If you are sure that you want to apply to the Right to Buy Scheme, it’s a good idea to use a mortgage broker to pull together the best mortgage quotes online. Find no-obligation mortgage quotes from top UK lenders here.