What is a Right to Buy Mortgage?

What is the Right to Buy Scheme?

‘Right to Buy’ is a government scheme. It gives people who are renting homes in the public sector the ability to buy their homes at a discounted price. It also includes the Right to Buy Housing Association scheme. There are also similar schemes in Northern Ireland, Scotland, and Wales.

Recent changes have also made it possible for Housing Association tenants to make use of the scheme. This is under a scheme labelled ‘Right to Acquire’. The qualifying period for Right to Buy has also been reduced.

How much is the Right to Buy discount?

The type of property will determine the discount you will be granted. The length of time you have been a tenant in the public sector will also apply.

• Flats and maisonettes: You’ll become eligible for a 50% discount after three years’ tenancy. After five years, the discount increases by 2% for each additional year you have been a tenant. The maximum discount is 70% and no more than £96,010. It’s £127,940 in the London boroughs.
• Houses: You will be eligible for a 35% discount after being a tenant for three years. After five years’ tenancy the discount increases by 1% for every additional year of tenancy. The maximum discount is 70% (as above, currently capped at £96,010, or £127,940 in the London boroughs).

Our Right to Buy mortgage calculator can help you gain an understanding of how much you may be able to borrow under the scheme.

Am I eligible for the Right to Buy scheme?

You may be eligible for a Right to Buy if the following applies to you:

• It’s for your main or only home.
• The property is self-contained.
• You qualify as a secure tenant.
• You’ve had a public sector landlord for a minimum of 3 years. This does not have to be 3 consecutive years.
• Your home is not due to be demolished.

You do not have any legal debt problems, including any outstanding possession orders.

What is Preserved Right to Buy?

You may qualify to purchase your home under the Preserved Right to Buy. This is where the property used to be owned by the council but has subsequently been sold to another landlord. This is a landlord such as a Housing Association. The change of ownership must have occurred whilst you were living in it.

Do I need a deposit to buy my council house?

Many lenders will use your discount towards your deposit. As such you will not always need any personal deposit.

However, this is not the case for all lenders. Some will still need you to have your own funds. This is typical if you have bad credit and need to use a specialist lender.

How do I apply for a Right to Buy mortgage?

Looking at your finances is a great place to start. Ensure this is something you want to commit to long-term. Aside from mortgage and utility payments, you’re also responsible for necessary maintenance and improvements to the property.

If you’re confident this is a route you want to take, the process is typically as follows:

• Complete a Right to Buy application form (RTB1) – this is online, or you can ask your landlord for a printed copy. Send it to your landlord by recorded or registered delivery to provide a record.
• Your landlord must respond within 4 weeks (or 8 weeks if they have been your landlord for less than three years). If they accept your application, they will need to get the property valued by a qualified surveyor.
• Your landlord will send you an offer within 8 weeks providing the property is a freehold. If it’s a leasehold this is extended to 12 weeks. It will detail the price they believe you should pay, how the price and discount were calculated and the amount of discount. Structural problems with the property will be noted. An estimate of the service charges for the first five years may be shown too.
• You’ll have 12 weeks to respond to their offer. You can also get an independent valuation carried out within this time. If they refuse your application, they must give a valid reason why.
• During this time, you’ll need to find a solicitor. You’ll also need a survey and to apply for a mortgage where applicable.

If all proceeds to your satisfaction, then you should be soon on the road to completion!