Right To Buy Mortgage Scheme
Find out if you can buy your council home at a discounted price
Under the Right to Buy scheme some council home and housing association tenants have the opportunity to buy their property at a big discounted price. In recent years the Government has attempted to expand the scheme, meaning even more renters are eligible. This guide explains how the scheme works, who can take part and what size discount you can get.
This guide is for council home and housing association tenants in England and, to a lesser extent, Northern Ireland. Right to Buy has been abolished in Scotland and Wales.
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Who can use Right to Buy?
Right to Buy is a scheme in England that allows most council home tenants, as well as some housing association tenants, to buy their council property at a discount. The scheme has been around for over 40 years, having been originally been introduced by Margaret Thatcher in the Housing Act 1980.
The scheme has been abolished in Wales and Scotland, though it's still running in Northern Ireland. For more information if you're in Northern Ireland, see the NIdirect website.
For those in England, you can apply to buy your council home if:
- It's your only, or main, home. So you'll need to be living in the property.
- The property is self-contained. In other words, you don't share any rooms – such as your kitchen, bathroom and toilet – with people outside your household.
- You're a secure tenant. That means there's a legal contract between you and the landlord.
- You've had a public sector landlord for at least three years. For example, a council, housing association or NHS trust. This doesn't have to be three years in a row).
- You have no legal issues with debt. For example a county court judgement.
If you share your tenancy with somebody else, it is possible to make a joint application under the Right to Buy scheme. Alternatively, you can also make an application with up to three family members who've lived with you for the past 12 months – even if they don't share your tenancy.
If your current home used to be a council property, but was sold to another public sector landlord whilst you were living in it, you may still be eligible for Right to Buy. This is known as 'Preserved Right to Buy'. You'll need to fulfil the normal eligibility criteria too.
You may also be eligible for Preserved Right to Buy if, after your home was sold by the council to a new landlord, you moved into a different property owned by that same new landlord (though not if you moved into a property owned by a different landlord).
Speak to your landlord if you think you might qualify to buy your home under Preserved Right to Buy or skip to our section on how to apply.
In 2018, the Government launched a pilot scheme across the Midlands to expand the Right to Buy scheme to housing association tenants who would otherwise have been ineligible. While this pilot has now ended, the Government hasn't ruled out trialling it again.
If you don't qualify for Right to Buy or Preserved Right to Buy, there is another scheme called Right to Acquire. This scheme allows most housing association tenants to buy their home at a discount – though the discount is not as generous (up to £16,000).
The eligibility criteria is very similar to Right to Buy. For example, you need to have had a public sector landlord for three years, and the property needs to be self-contained, as well a being your main / only home.
To be eligible, your property must either have been:
- Built or bought by a housing association after 31 March 1997.
- Transferred from a local council to a housing association after 31 March 1997.
Speak to your landlord if you think you are eligible for Right to Acquire. See the Gov.uk website for more details about the scheme and how to apply.
How much is the Right to Buy discount?
Those who qualify for Right to Buy can get a discount off the market value of the home they live in. Currently the biggest discount possible is £84,600 across England and £112,800 if you live in London, though these thresholds increase each April.
How big a discount you can actually get depends on a few factors, including whether you live in a house or a flat, and how long you've been a public sector tenant for. Here's how it works:
Living in a house
- If you've been a public sector tenant for between three and five years. Here you'll get a 35% discount off the market value of your property (up to a max £84,600 or £112,800). So if you live in a property worth £200,000, the Right to Buy discount could be worth £70,000 – meaning you could buy the property for nearer to £130,000.
- If you've been a public sector tenant for longer than five years. After five years, the discount goes up by 1% for every extra year you've been a public sector tenant, up to a maximum of 70% or £84,600 across England and £112,800 in London – whichever is lower.
Living in a flat
- If you've been a public sector tenant for between three and five years. Here you'll get a 50% discount off the market value of your property (up to a max £84,600 or £112,800). So if you live in a property worth £140,000, the Right to Buy discount could be worth £70,000 – meaning you could buy the property for nearer to £70,000.
- If you've been a public sector tenant for longer than five years. After five years, the discount goes up by 2% for each extra year you've been a public sector tenant, up to a maximum of 70% (again capped at £84,600 or £112,800).
Where your landlord has spent money either building or maintaining your home, this could reduce how big a discount you're entitled to. There's a handy Right to Buy calculator on the Gov.uk website which'll give you some indication of the discount you might be due.
If you're buying in Northern Ireland, the biggest discount available is £24,000. For more info on how the discount there is calculated, see the NIdirect website.
How do I apply for Right to Buy?
There are four steps you'll need to take if you want to apply to purchase your council property under the Right to Buy scheme (this doesn't include securing a mortgage, which we'll discuss below).
Here's what you need to do:
- Fill in an RTB1 application form. Follow the link to the form and it tells you all the information you'll need to fill out the form and send to your landlord.
- Send the application form to your landlord. Once you've completed the online form, you can save it, print it out and sign in the relevant places. Send the printed form by recorded to your landlord (this way you'll know when your landlord has received it).
- You'll then get an answer to whether or not your landlord is willing to sell. Your landlord must respond within four weeks of your application (eight weeks if they've been your landlord for less than three years). Where the answer is no, the landlord should state their reasons for declining.
You'll only be able to appeal a 'no' if the reason for being declined is that the property you want to buy is suitable for elderly people. To do this, you'd need to appeal to a tribunal.
- If your landlord agrees to sell, they will send you an 'offer'. This offer must be sent within eight weeks of their agreeing to the sale if you're buying a freehold property, or 12 weeks if you're buying a leasehold. The offer will include details of:
- The price they think you should pay for the property and how it was worked out.
- Your level of discount and how it was worked out.
- A description of the property and any land included in the price.
- Estimates of any service charges for the first five years.
- Any known problems with the property's structure, for example subsidence.
You'll have 12 weeks after you get your landlord's offer to tell it if you want to buy the property. Once this time is up, your landlord will then send you a reminder if you haven't replied to the offer. You have 28 days to reply to it, or the landlord could drop your application.
Don't worry, you can pull out of the sale and continue to rent at any time.
What happens if I disagree with my landlord's offer?
If you disagree with your landlord's offer and think it has set your home's market value too high, you have to write to it within three months of getting the offer and ask for an independent valuation. A district valuer from HM Revenue and Customs (HMRC)will then visit your property and decide how much it's worth.
You'll have 12 weeks to accept HMRC's valuation or pull out of the sale.
My landlord is delaying – what can I do?
Your landlord must respond to your application within the timeframes set out above. If they don't, you might be able to get a further reduction off the sale price of your home.
To get a reduction because of a delay, fill in the 'Initial notice of delay' form (RTB6) and send it to your landlord. Your landlord must then either move the sale along within one month or send you a 'counter notice'. The counter notice will say that it has already replied, or explain why it can't speed things up.
If your landlord doesn't reply within a month of getting the RTB6, fill in the 'Operative notice of delay' form (RTB8). This means any rent you pay while you're waiting to hear from your landlord could be taken off the sale price. You can do this each time your landlord is late getting back to you.
If you do decide to buy, ultimately you're responsible for how you finance buying your home – your landlord can't arrange this for you. This means you'll have to go through the same process of applying for a mortgage as anyone else buying a property without the Right to Buy scheme.
Buying a property is a big decision and not something that should be taken lightly. Consider all the costs, not just the mortgage repayments. You'll have additional costs and responsibilities you may not have had as a tenant, such as repairs and maintenance.
If this is the first home you'll have owned, have a read of our First-time buyers' guide beforehand for what to expect during the home-buying process, including surveys and applying for a mortgage. We've also got a Cheap mortgage finding guide with tips on how to find the right mortgage for you, including the benefits of using a broker.
Plus, if you buy a flat, you'll probably be a leaseholder, and will likely have to pay a service charge to the housing association/council for maintenance of the building and surrounding area. We've got a whole guide explaining what a leasehold is – see Leasehold versus freehold.
Selling your Right to Buy home – the need-to-knows
You can sell the property, but it comes with some caveats. It's not as easy as buying it with a big discount and then being able to sell it off at full market value whenever you like and to whomever you like.
If you sell the property within 10 years of buying it through Right to Buy, you'll first have to offer it either to your old landlord or another social landlord in the area. Where the landlord wants to re-buy the property, it should be sold at the full market price agreed between you and the landlord. If you can't agree, a district valuer will say how much your home is worth and set the price.
The landlord has eight weeks to respond to your offer. If they don't get back to you, then you can sell your home to anyone after this time.
You must PAY BACK discount if you sell within five years
If you sell the property within the first five years, you'll also have to pay back some, or all, of the discount. After five years, won't need to repay any of the discount.
Where you sell within the first year of ownership, you'll have to pay back ALL of the discount. After that, the total amount you pay back reduces to:
- 80% of the discount in the second year.
- 60% of the discount in the third year.
- 40% of the discount in the fourth year.
- 20% of the discount in the fifth year.
The amount you pay back also depends on the value of your home when you sell it. So if your property has increased in value since the time you bought it, this will impact home much you need to repay.
For example, let's imagine you bought your home through Right to Buy. It was valued at £100,000 at the time, and you got a 40% discount (£40,000), meaning you paid £60,000 in total. You then decide to sell your home 18 months later, but it's now valued at £120,000. As 40% (the discount you originally got) of £120,000 is £48,000, and as you're in the second year, you would repay 80% of £48,000, which is £38,400.
You may not have to pay back the discount if you transfer ownership of your home to a member of your family. But you'll need to agree this first with your landlord and then get a solicitor to do this for you.
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