Right To Buy
Deciding to buy your council house is a big financial commitment. Owning a home brings many benefits, but there are also costs and risks involved. It is vital, therefore, that you are aware of all the facts.
The information provided on this page is not a substitute for professional advice from a qualified financial advisor.
The MHCLG has updated the Right to Buy: Summary Booklet for tenants interested in taking up their Right to Buy, to reflect new maximum discount levels from the 21st November 2024. The booklet provides an overview of eligibility criteria, discount levels, the application process, how to take the next steps, and useful contacts for free, unbiased advice, including the Right to Buy Agent service.
Do You Have The Right To Buy?
The answer is probably 'yes' if you are living in a council property and have been a council or housing association tenant for at least 3 years. These 3 years do not have to be continuous and could have been in different homes with different landlords. If any family members have lived in your home for the past 12 months, they may be able to join in the Right to Buy with you.
If you are buying jointly with someone else the discount is based on the person with the most years as a public sector tenant. For example, if you have got ten years as a tenant but your partner has 15, the discount will be based on 15 years.
Are There Any Council Housing Properties You Can't Buy?
Yes, there are a number of exceptions to the Right to Buy. For example, if your home is suitable for the elderly or is in a sheltered scheme we can refuse to let you buy your home.
Can You Buy a Flat?
Yes, as long as it doesn't fit into one of the exemption categories. However, you should be aware that any sale is conditional on a 99 year lease and annual service charge. You may have limited choice when looking for a mortgage to buy one of these properties. You will need to consider whether or not there might be any difficulty in selling this type of property in the future.
How Do You Apply To Buy Your Home?
You need to complete the 'Right to Buy' claim form by clicking here. You do not have to pay for this form and you should be wary of companies charging you for this leaflet. Once you have filled out this form, you need to return it to Property Services at Lancaster Town Hall. As it is an important document, you may wish to hand deliver it and request a receipt or send it by recorded delivery.
How Will Your Home Be Valued?
The market value of your home disregarding any improvements carried out by you is assessed, the discount you will get (up to the current maximum of £77,900) is then taken off this value to produce the purchase price. You may (within three months) appeal to the district valuer if you do not agree with the council's assessment of the market value.
Your discount may also be reduced by the cost floor rule. This may apply if we have spent a lot of money repairing or maintaining your home. Under the cost floor rule, the discount you receive must not reduce the price you pay below what has been spent on building, buying, repairing or maintaining it.
Discounts
You can get a discount on the market value of your home when you buy it if you qualify for Right to Buy.
The discount is based on:
- the type of property you’re buying - a flat or house
- the value of your home
- where you live
- how long you’ve been a tenant with a public sector landlord
You’ll usually have to repay some or all your discount if you sell your home within 5 years. You might also get a smaller discount if you’ve used Right to Buy in the past.
Working Out the Discount
There are different discount levels for houses and flats.
If you’re buying with someone else, you count the years of whoever’s been a public sector tenant the longest.
Houses - You get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years.
After 5 years, the discount goes up 1% for every extra year you’ve been a public sector tenant up to the maximum discount amount.
Flats - You get a 50% discount if you’ve been a public sector tenant for between 3 and 5 years.
After 5 years, the discount goes up 2% for every extra year you’ve been a public sector tenant, up to the maximum discount amount.
The Maximum Discount
The maximum discount you can get is whichever is lower:
- 70% of the value of your property, or,
- £26,000 – This is the Maximum Discount for the North-West
If you applied to buy your home before 21 November 2024
The maximum discount you can get is whichever of the following is lower:
- 70% of the value of your property
- £136,400 if your home is in a London borough
- £102,400 if your home is outside London
If Your Landlord Has Spent Money on Your Home
Your discount will be less if your landlord has spent money building or maintaining your home:
- in the last 10 years - if your landlord built or acquired your home before 2 April 2012
- in the last 15 years - if you’re buying your home through Preserved Right to Buy, or if your landlord acquired your home after 2 April 2012
You will not get any discount if your landlord has spent more money than your home is now worth.
What If There Are Delays Or Problems With The Sale?
Most sales go through quickly but sometimes there are problems or delays. If there are delays with the sale that we are responsible for, you may be entitled to a reduction in the purchase price.
What Other Costs Are There When You Buy Your Home?
There are some one-off costs when buying your home. These include stamp duty, a survey and independent financial and legal advice.
You should employ a solicitor or licensed conveyor to look after the legal side of buying your home. Legal costs can vary greatly and often depend on the amount of work involved. You will also have to pay for various searches and fees they will need to carry out to complete the purchase. Before employing anyone, always find out how much it will cost you.
If you are financing buying your home with a mortgage, you may also have to pay a valuation fee and an arrangement fee. Some mortgage companies may pay some or all of these fees for you. It is important to shop around and read the small print, as some companies may add these costs to the mortgage or you may end up paying a higher interest rate. The Citizens Advice Bureau will be able to provide you with free advice on financial matters.
What Are The Costs Of Owning Your Own Home?
You will also have to pay for all maintenance, repair and improvements, your regular living expenses, your household bills and service charge (if you buy a flat). You need to make sure you can afford all of these and that you are aware of the costs. For example, how much will it cost you to call out a plumber at the weekend if the central heating breaks down, or could you afford a new boiler if the plumber couldn't fix it?
What Are The Risks Associated With Owning Your Own Home?
If you do not keep up repayments on your mortgage or other loan secured against your home, you home can be repossessed and you would become homeless. You are not able to claim housing benefit for mortgage payments. It is also important to remember that the value of property can go up as well as down.
What Happens If You Sell Your Council House After You Have Bought It?
Once you buy your home under the right to buy, you can sell it whenever
you want. But if you sell your home:
- Within the First year of purchase: The whole discount will have to be repaid.
- Within the Second year of purchase: 80% of the discount will have to be repaid.
- Within the Third year of purchase: 60% of the discount will have to be repaid.
- Within the Fourth year of purchase: 40% of the discount will have to be repaid.
- Within the Fifth year of purchase: 20% of the discount will have to be repaid.
How Much Can You Afford To Borrow?
Before you decide whether to buy a property, you should think carefully about how much you can realistically afford to repay each month. You need to bear in mind that your monthly repayments may increase considerably if interest rates rise. There are lots of different mortgages on offer, so it's worth shopping around for the best deal for you.
It is sensible to be wary about borrowing a high percentage of the property's value, even if a lender says you can. The more you borrow, the higher the risks because:
- If your income falls it will be more difficult to afford your monthly payments.
- If interest rates rise your monthly payments may increase.
- If property prices fall, you run a greater risk of falling into negative equity - this is when you owe more on your mortgage that your house is worth.
- You may have to pay high interest rates and/or mortgage indemnity guarantee if you borrow a high percentage of the value of the property.
Where Can You Get Further Advice & Help?
The Citizens Advice Bureau can provide free legal and financial advice. You can also contact a solicitor for legal advice and an independent financial advisor for financial advice, although there is usually a charge for this.