Right to Buy:
Everything you need to know
Right to Buy has helped and continues to help people purchase their council homes at reduced prices. We explain everything you need to know to start the process.
What is Right to Buy/Right to Acquire?
Tenants currently living in rented accommodation in England and Northern Ireland can potentially buy their home with Right to Buy. Introduced through the Housing Act 1980, Right to Buy was transformative in letting people stuck in a cycle of renting purchase their homes at a greatly reduced price.
It is important to note that the full scheme is available in England only, with Northern Ireland getting a reduced overall discount compared to England.
How big is the discount for Right to Buy?
How much of a discount you can get depends on where you live and the type of property you wish to buy. Discounts are also affected by the following:
- How long you’ve lived in the property. You can get a 35% discount if you have been a tenant living in a house for three to five years. For every additional year after five years, you will get a further 1% onto the discount, up to a maximum of 70%. This maximum translates to £82,000 across England and £110,500 in London.
- If you live in a flat. The discount increases to 50% for flat tenants who have lived in the property for between three and five years. After five years, the discount further increases to 2% per year, up to a maximum of 70%.
Figure out how much of a discount you can get with this calculator from the Government’s Right to Buy calculator.
What about the Right to Acquire discount?
It is important to remember that the Right to Acquire discount is considerably lower than that of Right to Buy. Subsequently, the maximum discount you can get from Right to Acquire is £16,000, but there are plans to extend Right to Buy to include all housing association tenants as well.
How do I start the Right to Buy process?
Your first step is the RTB1 application form, which you must fill out and send to your landlord. This will inform them that you intend to purchase the property, which they can either agree or disagree with.
If they agree to sell, they’ll tell you how much they think you should pay for the property, as well as how they determined the price. Additionally, they will include a property description, service charge estimates (for the first five years), details of any known property problems (subsidence for example), and how much discount you will get.
What if my landlord doesn’t agree to sell?
You should prepare yourself for the very real possibility that your landlord simply doesn’t want to sell the property. If they do decide to keep the property, the onus is on them to explain their reasons. They must be objective in their response, for example, if the tenant doesn’t qualify for Right to Buy.
Once you’ve received their offer, you’ll have 12 weeks to let them know if you want to buy the property. If you miss the 12-week window, your landlord will send you a reminder letter. Consequently, you will need to reply within 28 days or your landlord is entitled to drop your application. Of course, you’re completely allowed to pull out of the sale yourself.
Buying a property is a huge step in life, so there is no pressure in pausing a purchase if it turns out to be the wrong time.
What if I disagree with the landlord’s offer?
In the event your landlord presents an offer that sets your home’s value too high, you need to respond to it within three months, asking for an independent valuation. What happens next is a district valuer from HM Revenue and Customs will visit the property, inspect it, and provide a valuation. After this, you then have 12 weeks to either pull out of the sale or accept the price and proceed.
Once you’ve accepted, your landlord will have four weeks to complete essential aspects of your Right to Buy application.
Starting the mortgage process
If everything works out between you and your landlord, you now need to start thinking about getting a mortgage for your new home. You will have to do this yourself as your landlord isn’t obliged to help. As a result, you will need to go through the same channels as everyone else looking to get a mortgage.
First thing to keep in mind is that buying a property is one of life’s largest decisions and shouldn’t be done without thinking about every important step. Therefore don’t think only about your mortgage repayments; start to factor in the costs you may not have had when you were a tenant, such as repairs and general maintenance.
Additionally, purchasing a flat means you will become a leaseholder, which means you need to pay a service charge to the housing association/council for building and surrounding area maintenance.
It is important to remember that getting a mortgage can involve substantial one-off costs that must be paid. These include:
- Stamp duty – a tax you must pay if your property costs more than £125,000
- Surveys – a conveyancer will need to conduct a survey of the property to check for faults, environmental factors, etc.
- Solicitor’s fees – this is what you pay a solicitor to cover the legal groundwork they must do, including the aforementioned
What happens if decide to sell the property after buying through Right to Buy?
If you want to sell your Right to Buy property, then you’ll need to be aware of the restrictions. These include:
- Selling the property within five years means you will need to pay back some, or all, of the discount. Trying to sell in the first year requires you to repay 100% of the discount, decreasing to 80% after the second year, then 60% for the third, 40% for the fourth, and finally 20% for the fifth year.
- Selling the property within 10 years of the initial purchase means you have to first offer the property for sale to your landlord, or another nearby social landlord. If a landlord decides to buy the property, it generally has to be sold at the full market price (which you will agree upon with the landlord). However, if the landlord disagrees with the prices, then a district valuer will be brought in to determine how much the home is worth.
Can OneDome help me with Right to Buy?
At OneDome, getting a mortgage for your Right to Buy property is simple. We use our tool, Mortgage Passport, to get you an accurate mortgage quote in minutes. Additionally, you can also use the Mortgage Passport to get a Mortgage in Principle, which lets you stand out from other buyers by showing them you’re in a genuine position to buy. We will also provide considerate mortgage advice from our mortgage advisors, who will help you pick the mortgage that works for your needs.
If you have any questions about your mortgage application, our concierge team will help guide you through the process. Don’t hesitate to give them a call on 0203 8686 262 between 09:00 and 17:00.
Want to learn about how mortgage rates are set? Read our guide on mortgage rates here, which also features essential information on lowering your overall costs.
Get a mortgage with OneDome
If you’d prefer to talk to a our mortgage advisors directly, you can call 0203 8686 262 between 09:00 and 17:00
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