The technicalities of the UK government’s Right to Buy scheme are quite complex. However, the general terms and conditions regarding eligibility are surprisingly simple. If you’re curious as to your eligibility under the Right to Buy program, speak to an independent expert before penning your application.
Right to Buy was introduced by the UK government to provide qualifying council tenants (and some housing association tenants) with the opportunity to buy their homes at a discount. In some instances, a very substantial discount – up to 70% off the property’s market value, up to a maximum of £82,800 (or £110,500 in London). Discount amounts are determined by the value of the property, the type of property and how long the buyer has been a council/public sector tenant.
For the most part, eligibility is established entirely on the basis of length of tenancy. But even those who don’t qualify under the normal terms of the Right to Buy scheme may still qualify for discounts on the value of their home.
Are You Eligible for Right to Buy?
You may be eligible to purchase your property under the Right to Buy scheme with an enormous discount, if you and your home satisfy several important requirements.
The tenant must:
- Have been living in public sector housing for a minimum of three years.
- Not have any legal problems with debt at the time of application.
- Not be living in sheltered housing or other specialist elderly or disabled housing.
- Not have any outstanding possession orders against them.
- Currently be a council tenant or have been a council tenant at the time ownership of their home was transferred to a housing association from the council. In the case of the latter, the tenant may have a ‘Preserved Right to Buy’.
The property must:
- By the only or primary residence of the applicant
- Be completely self-contained
- Not be due for demolition
If you satisfy all of the above requirements, there’s every chance you will qualify under the Right to Buy scheme. Again, the extent to which your home will be discounted will be determined by multiple factors. As will your potential eligibility for a Right to Buy mortgage, for which independent broker support should be sought.
What’s a Preserved Right to Buy?
As detailed above, it’s also possible to qualify under the Right to Buy scheme if you are living in an ex-council property. However, this only applies in instances where the tenant was living in the property at the time it was transferred to a housing association from their local council.
The process under the Preserved Right to Buy scheme works in almost exactly the same way as the standard Right to Buy, only with different terms and conditions regarding who qualifies. Again, if you believe you may be entitled to a significant discount on your property, consult with an independent expert before completing and submitting your application.
What’s Right to Acquire?
As things stand, the vast majority of housing association tenants are not eligible under the Right to Buy scheme. This is something the UK government has earmarked for change, but when and where sweeping reforms will occur remains anyone’s guess.
In the meantime, separate discounts on property purchases are available for qualifying housing association tenants. The current discount under the ‘Right to Acquire’ scheme is significantly lower – from £9,000 up to £16,000, determined by various criteria including property type, value and location. However, these kinds of discounts could still add up to significant savings – particularly for buyers concerned about initial deposit payments.
What Kind of Mortgage Do You Need for Right to Buy?
Last but not least, there are no specific rules or regulations governing Right to Buy mortgages. Financing a property under the scheme is exactly the same as with any other property purchase, only with the benefit of a significant discount.
Perhaps more importantly, a discount on your property could be accepted by your lender as a deposit, meaning no requirement to provide a deposit to facilitate the transaction. Speak to a Right to Buy expert for more information on any of these issues.
This article was provided by UK Property Finance.