Right to Buy

There are many council tenant households that would like to own their property outright but are not in a financial position to be able to through conventional channels. The Right to Buy scheme was introduced by the government to assist these households and offers a discount off the value of the property therefore making it more affordable.

What is The Right to Buy Scheme?

The Right to Buy scheme was introduced in 1979 by the government to help give the then five million council house tenants in Britain the opportunity to buy their property at a discount from their council.

If you have been a council tenant for at least two years (five years if you became a tenant after 18 January 2005), you will most likely be given the opportunity to buy your council home at a discount. Tenants of housing associations who hold the preserved right to buy (PRTB) may also be eligible.

Instances where tenants are not eligible for the right to buy scheme are if:

• you occupy housing that is specially provided for the elderly or disabled
• you are filing for bankruptcy
• your home is being repossessed by order of the courts
• your home is rented in relation to your employment
• you are an assured tenant of a registered social landlord (RSL) and do not possess a PRTB

The discount you will be entitled to is dependent on how long you have been a tenant. For example, if you have lived in the property for five years, you would be eligible for a 35% discount whereas you would get a 50% discount if you have lived in the property for 20 years. These discounts also have a maximum value and typically range from between £16,000 to £38,000 depending on the area you live in. You should contact your landlord to find out the exact amount.

Please note that if you decide to sell a property purchased using the right to buy scheme within five years of buying, some councils may ask you to pay back the discount.

For more information about Right to Buy schemes, you can either view the 'Your right to buy your home' guide or visit www.direct.gov.uk.

Right to Buy Mortgages

There are a number of right to buy mortgage schemes specifically tailored for right to buy properties. Not every lender will offer a specific right to buy mortgage but some will lend using their normal terms.

Most lenders will be able to lend up to 95% to 100% of the right to buy price as they use the market value of the property when assessing a loan application. They can offer such high loan to values due to the discount of the right to buy.

e.g. if buying a property valued at £100,000 with a right to buy price of £75,000. The lender would consider a loan of £75,000 (i.e. the full amount) to be at a loan to value of 75% not 100% as they use the market valuation (£75,000 / £100,000 x 100)

It is also possible to borrow more than the Right to Buy price if there is a significant enough discount available. Most lenders work on a maximum loan of 85% of the market value so if your discount via the right to buy scheme is greater than 15%, this may be possible.

Advantages of Right to Buy Mortgages

• The right to buy scheme allows council tenants to purchase their property at a discount therefore making it more affordable
• The longer you have lived in the property, the greater the discount you are entitled to
• It is sometimes possible to borrow over 100% of the right to buy price

Disadvantages of Right to Buy Mortgages

• If the property is sold within 5 years of buying, you may have to repay the discount provided
• Not every lender will offer a Right to Buy mortgage

Summary

• The Right to Buy scheme gives council house tenants the opportunity to buy their property at a discount from their council
• The discount available is dependent on how long you have lived in the property and the area you live in

For more information about 'Right To Buy Mortgages', you can call us on 020 8783 1337 or submit an online quote.