Many of us dream of getting onto the property ladder. And, with the Right To Buy scheme, it could be more realistic than you might think.
Read on to find out if you could use Right to Buy to purchase your home, how the scheme works, and what you’ll need to do to use it to get on the property ladder.
The information in this blog relates to Right to Buy in England only. Unfortunately, Scotland and Wales have ended their Right to Buy schemes. A different scheme is available in Northern Ireland.
What is the Right to Buy scheme?
Right to Buy gives certain council tenants the right to purchase the home they live in, at a discounted price. The discount available is up to £87,200, or £116,200 in London (these figures are correct at the time of writing, 14th July 2022).
If you get a specialist Right to Buy mortgage, then in most cases you won’t need to put up a cash deposit yourself. The lender will usually accept the discount as a deposit instead. Be sure to check this before you commit to anything though, as not all lenders will treat your Right to Buy discount as your deposit!
But, there are other costs to consider. For example, you’ll still need to pay conveyancing fees, stamp duty (if applicable), and survey fees. Once you own your home, you’ll also be responsible for repair and maintenance costs, which you may not have to pay for as a tenant. You'll also need to keep on top of your mortgage repayments so that your home is not put at risk.
You also won’t be able to claim housing benefits as a homeowner, which may affect your income if you receive this now.
Council tenants and Right to Buy
Right to Buy is available to people who rent their homes from their local council. To be eligible, you must meet certain criteria:
- you must have been a council tenant for at least three years
- you must be a secure tenant (which means you have a legal contract with your landlord)
- the property must be your only or main home
- your home is not sheltered accommodation or otherwise suitable for elderly or disabled people
- you aren’t bankrupt (or in the process of being made bankrupt)
- you don’t have an outstanding Individual Voluntary Arrangement (IVA) or Debt Relief Order (DRO)
- you haven’t been ordered to leave your home by a court
- your home is not due to be demolished
If you’re eligible, can afford it, and decide to use your Right to Buy, then you could own your home within a few months after you place your application. When you apply, your landlord usually has four weeks to confirm whether you have the Right to Buy your home, and a further eight weeks to send you an offer notice (12 weeks if your home is a leasehold property). You then have 12 weeks to decide whether you want to accept the offer, at which point you’ll start going through the motions with a solicitor to sort out a survey, searches and other paperwork you need, and arrange your mortgage.
You can find out more about applying for Right to Buy here.
Housing association tenants and Right to Buy
Most housing association tenants don’t currently have the right to buy their homes. There are a couple of exceptions to this, though. The first is under the Preserved Right to Buy, and the second is the Right to Acquire – a slightly different scheme to Right to Buy.
Preserved Right to Buy
Preserved Right to Buy applies to ex-council tenants whose homes have been transferred to a new landlord, like a housing association. To be eligible, you must have been living in your home at the time the transfer took place. If you’ve moved in since the property was transferred to a new landlord, you will not usually be eligible for the Preserved Right to Buy scheme.
You also won’t be eligible if you no longer live in the property: you do not have the Right to Buy, preserved or otherwise, on properties you’ve lived in in the past. The only exception to this is if you’ve moved to another property owned by the same new landlord. So, for example, if you lived in a council house at the time it was transferred to a housing association, and have since moved to another property owned by that same housing association, you may be able to use your Preserved Right to Buy in order to buy it.
If you’re not sure whether you have the Preserved Right to Buy, you can speak to your landlord, or use the eligibility quiz on the government website to find out.
Right to Acquire
The Right to Acquire scheme, like the Right to Buy scheme, allows you to buy your home at a discount. But, the discounts available are much smaller – between £9,000 and £16,000 on the price of your home. The discount you’ll receive depends on where you live.
You may have the Right to Acquire your home if you meet the following criteria:
- you’ve had a public sector landlord for 3 years or more. These landlords include housing associations, councils, the armed forces and NHS and foundation trusts
- your property was built or bought by a housing association using a government social housing grant, or transferred from a local council after 31st March 1997
- you are not currently, or in the process of being made bankrupt
- you have not been ordered to leave your home by a court
- you’re not a council tenant
- you don’t have Preserved Right to Buy
You can learn more about the Right to Acquire scheme here.
Private tenants and Right to Buy
Unfortunately, the Right to Buy scheme doesn’t extend to people who rent their home from a private landlord. But, if you love your rented home and would like to buy it, there’s nothing stopping you from having a conversation with your landlord about whether they’d be prepared to sell. You can’t force them to sell the property, just as you can’t force someone to sell anything that belongs to them. But, if you don’t ask, you’ll never know!
If you do buy your home from your private landlord, you won’t be eligible for any discounts on the price of your home as you would be with the Right to Buy scheme. This means what you pay is down to a combination of your negotiating skills and what your landlord has in mind.
These considerations may help you when speaking to your landlord and negotiating a fair price:
- what did your landlord pay for the property compared to its value now, and what you’re offering? Reminding your landlord how much money they still stand to make from accepting your offer may make them more receptive to your offer if you can’t quite afford the market value
- if your landlord sells to you, they won’t have to pay estate agent fees. This could save them hundreds or even thousands of pounds that they might be prepared to knock off the price of the property
- the sale could go through more quickly. Although you’ll still need a conveyancer or solicitor to handle the paperwork, you can also speak to each other, rather than wait for your solicitors to relay questions and answers between you.
The future of Right to Buy
The future of Right to Buy looks bright, especially for housing association tenants who currently don’t have the Right to Buy their homes, as the scheme will be extended to cover them.
Extending Right to Buy through a voluntary scheme (Voluntary Right to Buy – or VRTB) is something the government has been working on for a while. Under this scheme, housing association tenants will be able to buy their homes at the same discounts as the normal Right to Buy scheme, which is far more generous than the Right to Acquire scheme.
A couple of successful pilot schemes have been run – one in 2016 and one in 2018 – but no date has been set yet for a full rollout of the VRTB. When the scheme is introduced around the country, there will be a few things to bear in mind if you want to use it.
It will be voluntary
It will be down to individual housing associations whether they take part in the VRTB scheme. They won’t be required to. In the pilot schemes, smaller housing associations who had the opportunity to take part opted not to, and this could be a sign that they will also choose not to offer the VRTB when it’s fully rolled out.
You may not be able to buy your home
Some housing associations own properties they aren’t legally allowed to sell. Others simply may not want to sell certain properties. If either of these situations arise, then you should be offered another property that the housing association owns, with the same discount. It’ll be up to you to decide whether you want to buy that property or not, and you can say no.
You may have to join a waiting list
Part of the government’s commitment to extending the Right to Buy scheme to housing association tenants is committing to replacing every home sold under Right to Buy, so that social housing is still available to those who need it.
The pilot schemes have highlighted that it takes longer than was perhaps expected to build replacement houses. So, when the VRTB scheme is rolled out, there may be a cap on how many people can use it in any given year to allow time for houses to be replaced. This may mean joining a waiting list which could potentially delay your home purchase by as much as a few years.
Not eligible for Right to Buy? Read more about Shared Ownership, another way to get onto the property ladder, in our guide!
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