Last year, the Government introduced a new Right to Buy housing scheme which allows council tenants to benefit from a new £77,900 discount on the market price if they want to buy their council home. The figure is £103,900 for tenants who live in London.
Who has the Right to Buy?
Only those who have been a tenant in the public sector for at least the last three years qualify for Right to Buy. So, the scheme is only open to people who live in a property owned by a local council, an NHS trust or a local housing association.
But you don’t have to have lived continuously in the house for a period of three years – it can have been in other public sector homes – and it doesn’t have to be in the home that you want to purchase. However, the home must be your sole property and it must be self-contained.
These are the main exclusions from the scheme:
Where the house or flat is not your main home
If you share a part of it with other tenants – for example, a common kitchen or bathroom
Your tenancy is introductory instead of a secure tenancy
It is subject to a court order which compels you to leave
You are an undischarged bankrupt
You are in the process of being declared bankrupt
You have debts to creditors or are subject to default orders
On top of these exclusions, particular properties are also excluded from the scheme. Generally these are homes that are reserved for elderly people or those who work in a particular public service like the health service, the police or the fire service.
How big a discount can I get?
While the largest discount available has increased to £77,900 (£103,900 in London) these are just the maximum figures. The exact sum that you will qualify for will depend upon several factors including how long you have been a council tenant, whether the property is a house or a flat and its value were it to be sold on the open market.
There are limits set on the maximum amount available – 70% for a council flat, for example – but the base level is 50% for those who have been council tenants for between three and five years. It increases by 2% for every additional year of council tenancy up to the maximum amount of 70%.
If you want to buy a council house through the scheme, then the maximum discount is 70% of its market value starting at 35% if you have lived in it for between three and five years. The figure increases by 1% for every year that you have lived as a council tenant.
The maximum figures increase in line with inflation (the consumer price index) every April.
What else do I need to look out for?
An obscure regulation called the Cost Floor rule means that the total discount available to you could be limited. This cap relates to the amount of money that your landlord – the local NHS trust or your council – has spent on repairs and maintenance to the house or flat over the previous 15 years even when you have not been the tenant in that house for this entire period. So the better the condition of the property the lower the effective discount you will get – the less you’re going to need to spend in terms of home improvements.
How do I apply for the Right to Buy?
You start and application by downloading the application form at https://www.gov.uk/right-to-buy-buying-your-council-home. Once you’ve filled in the form, send your application to the landlord (the council, for example) who will then have to respond within four weeks telling you if you are eligible. The time allowed for a response increases to eight weeks if the authority has been your landlord for five years or less.
Once the landlord agrees that you can buy the home, it will send you a Section 125 notice which details the offer. This will include a valuation of the home and tell you how much you will be expected to pay as well as any problems with the property that it knows about, what the discount rate will be and an estimate of any fees that will be deducted from the discount. You then have 12 weeks to accept the offer or to reject it and maintain the status quo.
If you disagree with the offer, then you can ask HMRC to carry out an independent valuation. You have three months to tell the landlord if you want to go down this route.
Oliver Jones has written for Solution Loans since 2016. His passion for personal finance comes through in the 200+ blog posts he's written since that time. His talent for explaining all things money means he's covered topics as diverse as...Read more about Oliver Jones