Right to Buy Scheme
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Right to Buy Scheme
Des Lally from Pia Mortgage Solutions joins the Mortgage and Protection podcast to tell us about the Right to Buy scheme.
What is the Right to Buy scheme and how does it work?
The scheme allows Council tenants to buy their homes at a discount. There are different rules for Wales, Scotland and Northern Ireland, but this conversation is around the rules in England.
Who qualifies for the Right to Buy scheme?
There are a few requirements for Right to Buy. It needs to be your only or main home and be self contained. You must be a secure tenant who has had a public sector landlord for at least three years – that means Council, Housing Association or NHS Trust.
If I do qualify for Right to Buy, what’s the process?
First, you fill in the Right to Buy application form. In England, it’s the RTB1 Notice. You then send it to your landlord, who must say yes or no within four weeks of receiving your application – or eight weeks if they’ve been your landlord for less than three years.
If they say no to your request, they must say why. If your landlord agrees to sell, they’ll send you an offer, and they must do this within eight weeks of saying yes for a freehold property or 12 weeks on a leasehold property.
The landlord’s offer will suggest a price for the property and how it’s worked out. It will also state the discount and how that is calculated. The offer also includes a description of the property and any land included in the price, estimates of any service charges for a flat or maisonette for the first five years and any known problems with the property structure.
You then have 12 weeks after you get your landlord’s offer to confirm that you want to buy. You’ll receive a reminder if you don’t reply to the offer, which then gives you 28 days to respond. An important thing to note is that you can pull out of the sale and continue to rent at any time.
What’s the discount for a house or a flat?
There are two distinct discounts, for houses and for flats. If you live in a house, you’ll get a 35% discount once you’ve been a public sector tenant for between three and five years. After five years, the discount goes up 1% for every additional year of tenancy, up to a maximum of 70% or £84,600 across England. In London the maximum is £112,800.
Meanwhile, if you live in a flat, you’ll get a 50% discount between three and five years of tenancy, with a further discount of 2% for each extra year after that. The maximum is again 70% or £84,600 across England and £112,800 in London boroughs, whichever is lower.
If you sell the home within five years, you’ll usually have to repay some or all of your discount. You might also find that your discount is smaller if you have used Right to Buy in the past.
Can I let my Right to Buy property out?
Yes, you can let the property out as soon as you complete the purchase.
Can the Council refuse my Right to Buy application?
Yes, they can, but they have to give reasons for refusing the application if they do.
You also have the option to appeal the decision, but you must do this within 56 days of the decision.
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What is Right to Acquire?
This is a similar scheme allowing Housing Association tenants to buy their home at a discount. Again you need the appropriate Right to Acquire application form for your Housing Association, and you need to have had a public sector landlord for three years. These landlords include Housing Associations, the Armed Forces, NHS Trusts and Foundation Trusts.
What happens if there are delays?
Delays do happen. Your landlord must complete parts of the right to buy application within set time limits. And if they don’t do that, you could get a reduction in the sale price.
How can a Mortgage Broker help?
If you’re looking to buy your property through the Right to Buy scheme, not only should you make contact with your landlord, but you should get in touch with a Mortgage Broker. We’ll be able to point you in the right direction of lenders that will accept Right to Buy applications.
The last thing that you want is to get your offer to purchase the property, and then find that your mortgage application is rejected. We’ll support you from the off – explaining the process, questions to ask, things to be aware of – and find you a mortgage that meets your needs.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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