The UK government’s Right to Buy currently offers extensive discounts for qualifying council property tenants, who wish to purchase the homes they live in. Plans were recently unveiled to extend the program to housing association tenants, though no formal rollout dates or deadlines have yet been confirmed.
Nevertheless, as an affordable housing program that’s set to continue growing and evolving over the coming years and decades, now’s the time to ensure you understand your rights and your eligibility under Right to Buy.
How Much Discount Is Available?
Discounts are calculated for qualifying tenants on the basis of their length of tenancy, the value of their property and the type of property they live in. There are different discounts available for council houses and flats, which as of 2019 are as follows:
- Discounts for council houses
If you’ve been a council house tenant for 3 to 5 years, you may qualify for a 35% discount off the market value of your property. After five years, this 35% discount increases by 1% each year, up to a maximum of a 70% discount.
The maximum monetary discount available on a council house is £82,000 in most of England, or £110,500 in London.
- Discounts for council flats
If you’ve been a council flat tenant for 3 to 5 years, you will be eligible for a discount of 50% on the market value of your home. After five years, the discount amount is increased by 2% annually up to the same 70% maximum.
The same maximum monetary discount available on a flat applies - £82,000 in most of England, or £110,500 in London.
In a working example, this would mean after spending 10 years in a council house and becoming eligible for a 60% discount, a £200,000 home could be purchased for as little as £80,000. There are currently no housing schemes of any kind in the UK that offer discounts nearly as generous as these.
How Does the Right to Buy Work in Practice?
Applying for a discount under the Right to Buy program is relatively simple, though independent expert support comes highly recommended. The process begins by filling out an RTB1 application form, indicating your intent to purchase the property from your landlord.
If you are deemed eligible and your landlord agrees to the sale, you will receive a formal reply indicating:
- The current market value of the property
- Your discount entitlement and the subsequent reduced property price
- A complete description of the property
- Known issues with the structure or maintenance of the property
- Five-year estimated service charges for flats and maisonettes
Once this letter has been received, you will have a period of 12 weeks to reply to your landlord and confirm whether you want to go ahead. After this initial 12-week period, you will be sent a reminder from your landlord, indicating that you must respond within 28 days, or your application will be rejected.
Nevertheless, you are entitled to repeat your application to purchase your council property at any time in the future.
If you think your landlord has valued the property inaccurately, you have up to three months to demand an independent valuation. A property will be assessed by a HM Revenue and Customs district valuer, after which the value of the property specified will be final and non-negotiable.
Your Right to Buy application must be processed by your landlord within four weeks, otherwise you may be entitled to a further reduction on the property price. Seek expert advice if you believe your landlord is delaying or disrupting your application process unnecessarily.
Last but not least, when the sale has been agreed by both parties, the prospective buyer must then organise a mortgage via the usual channels. However, the discount granted on their property will typically be accepted by most lenders in place of the usual deposit.
If you have any questions or concerns regarding your eligibility under the government’s Right to Buy, we’d standing by to take your call. Contact a member of our team anytime for an obligation-free consultation. – ukpropertyfinance.co.uk
