The Right to Buy Scheme was first introduced by the Government in 1980, as a way to help council and housing association tenants purchase their first home and get a start on the property ladder.
The scheme allows you to purchase your current home from the council at a significant discount from the value of the property, calculated based on how long you have lived there.
Am I Eligible?
Anyone living in ‘public sector’ housing, from the council, housing association or NHS, is eligible for the Right to Buy scheme after living in the property for three years. To qualify, you cannot own any other properties, or have any bankruptcy charges or creditor agreements placed against you. Your partner or spouse can also apply alongside you as a joint application, provided you have lived in the property together for the last 12 months.
What Discount will I Receive?
The discount you receive will be a percentage of the property’s value, calculated based on how long you have lived in your home. The type of property you live in will also be taken into consideration, with a larger discount being offered on flats in comparison to houses.
You are entitled to a Right to Buy discount after living in your property for three years. If you live in a house, this will be 35% of the property’s value, and if you live in a flat you will receive 50%. This discount will then apply for the next two years, until you reach five years of tenancy. At this point the discount will then increase for each additional year that you live in the property going forward. This will be by 1% each year for houses and 2% for flats. You can receive a maximum discount of either 70% of the property’s value, or £82,800 (£110,500 in London), whichever is lower.
As an example, on a property valued at £100,000 which you have lived in for ten years, the discount would break down as follows:
On a house, you would be eligible for a discount of 40% (35% for the first three years, with an additional 1% for each extra year after the five year mark). This would give you a discount of £40,000, meaning you would be able to purchase the property for £60,000.
On a flat, you would be eligible for a discount of 60% (50% for the first three years, with an additional 2% for each extra year after the five year mark). This would give you a discount of £60,000, meaning you would be able to purchase the property for £40,000.
If you are unsure about what discount you may receive, the Government offers a Right to Buy calculator tool at the following link: https://righttobuy.gov.uk/right-to-buy-calculator/
Can I Sell a Right to Buy Property?
You are free to sell your property at any point, however you will be required to re-pay a portion of the discount for the first five years after completing the purchase. This starts at having to re-pay the entire amount for the first year, 80% the second, 60% the third, and so on until you reach the end of the fifth year.
After five years you are able to sell the property without having to re-pay any of the discount you received. You will, however, be obligated to offer the original landlord the right-of-first-refusal to purchase the property before placing it on the general market. This requirement will last for a period of ten years after first completing the purchase.
How Do I Apply?
You can apply for the Right to Buy Scheme by completing an application form, which can be downloaded from the Government website at the following link: https://righttobuy.gov.uk/apply/rtb-2014-form/ Once you have completed the form, you will need to send it to your Landlord, who will then have four weeks to give you a yes or no answer. If the landlord declines your application, they must give a reason why, and you are free to contest their decision.
Following the acceptance of the application, your landlord then has a deadline of 8 (for a house) or 12 (for a flat) weeks to send you a formal offer, containing the property price and discount you will receive, along with any other relevant information about service charges or other issues that may come with the property.
After receiving the offer, you then have 12 weeks to decide if you would like to proceed with the purchase or not. Once you have accepted, you still have the right to withdraw from the purchase at any time should you change your mind.
The Conveyancing Process
Once the Right to Buy purchase has been agreed, you will need to instruct a conveyancer to act on your behalf for the legal side of the process. Buying a property through Right to Buy is much the same as purchasing any other property, and follows the same processes: https://www.bannerjones.co.uk/for-you-your-family/services/residential-property/buying
If you are purchasing the property using a mortgage, it is important to remember that your mortgage lender will still require all the usual searches and checks on the property, even if you feel you are familiar enough with your home to proceed without them.
Our expert conveyancing team are very experienced in dealing with Right to Buy purchases, across our offices in Chesterfield, Sheffield, Mansfield and Dronfield, and would be more than happy to help with your purchase. We work on competitive fixed fees, so you will always know exactly what you will need to pay throughout the process. If you have any queries about buying your property through Right to Buy, please do not hesitate to contact us and one of the team would be more than happy to help.