Right to Buy is a government scheme introduced to help tenants purchase their council-owned properties at a discounted rate. The discounts offered can often be used against the upfront deposit cost, meaning that those with enough income for monthly mortgage repayments can purchase their property without paying for an upfront deposit. This scheme is designed to help tenants who are unable to save for large deposits take their first step onto the property ladder.
Is Right to Buy in England ending?
The right to Buy scheme has been around for over 40 years, originally introduced by the Housing Act in 1980.
The scheme has been abolished in Wales and Scotland. It’s still running in Northern Ireland, though there are more exemptions meaning fewer people will be eligible to participate by the end of 2022.
As for England, the scheme remains up and running, and you can check your eligibility and apply through the GOV.uk website.
Do I qualify for a Right to Buy?
To be eligible to buy
your council home under the Right to Buy scheme, you will need to meet these requirements:
- The property is your only home
- The property doesn’t have any shared facilities with other households such as a communal bathroom or kitchen
- Your landlord is a public sector body, which means they operate under a council, a housing association or government department
- You have had a public sector landlord for a minimum of 3 years
- You’re not in any legal disputes with a creditor (credit cards, loans, etc)
- You’re a secure tenant
What discount will I get?
Your overall discount from your Right to Buy will depend on the location
of the property and whether it is a house or a flat. If you live in a house, you’ll receive a 35% discount if you’ve been a tenant for between three and five years. After five years, the discount increases by 1% for every additional year you’ve been a tenant.
If you live in a flat, you can get a 50% discount with the same rules applying, and after 5 years your discount goes up by 2% for every extra year you’ve remained a tenant.
The maximum discount tenants can receive is £87,200 and £116,200 for homes in London. The maximum discounts increase each year on the 6th
of April as long as the Consumer Price index increases. If the index does not increase, the discounts will stay the same.
Do I still need a deposit for Right to Buy?
The deposit depends on the lender, but most mortgage companies won’t ask for a deposit to give you a Right to Buy mortgage. Most mortgage companies will use the discount received on your home on the deposit. Because of this, the Right to Buy scheme is an excellent way to get on the property ladder if you don’t have the means to save a large sum of money up.
Can I be refused a Right to Buy?
You can be refused a Right to Buy application if you or your property aren’t eligible, however the government scheme is managed by various legal time limits and therefore landlords are given a one-month period within which they must refuse or reject an application under the legislation. Failure to act after one month may result in the landlord being forced to sell the property to the tenant even if the tenant did not have the Right to Buy.
Repayment of discount
If you have purchased your home under the Right to Buy scheme, you can sell it whenever you like. However, if you sell within the discount repayment period, you will likely have to repay some or all of the discount.
Within the first year of your purchase, choosing to sell would mean the whole discount needs repaying. Four fifths must be repaid in the second year, three fifths in the third – and so on. After 5 years, you can sell without paying any discount.
If you sell within ten years, you’re obliged to offer the property back to your original landlord and if they decline the offer or don’t accept within 8 months, you are then authorised to put the property on the open market at full value.
Are you looking to buy or rent a new home? Contact
your nearest Martin & Co branch today to start your journey.
