Right to Buy Scheme: Everything You Need to Know
Right to Buy is a government-run scheme that allows most council tenants to buy their council home at a discount of up to £103,900 in London, and £77,900 across the rest of England.
The scheme was first introduced in 1980 as a way of helping council tenants get on the property ladder by owning their first home. Of course, not everyone will be eligible and the percentage of discount relies heavily on a number of factors.
This complete guide presented by Compare My Move gives all you need to know about Right to Buy, including who is eligible, the amount of discount and how to apply.
Who has the Right to Buy?
The Right to Buy Scheme is available for secure tenants that inhabit any public sector housing (council, housing association and NHS).
To be eligible, you need to have lived in a property or properties owned by a single landlord or association for more than three years.
The property should be your only home and it must be self-contained (i.e. not a bedsit).
You cannot apply for the Right to Buy scheme if you have a current court possession order that states you must leave your home.
You will also not be accepted for the scheme if you are an undischarged bankrupt, or have a bankruptcy petition pending against you. Equally, you cannot apply if you have a current arrangement with creditors of which you still owe money to.
Right to buy allows tenants to make joint applications if desired, whether with a spouse who has lived with you for the past 12 months, or another tenant.
Any land and outbuildings that have been let out to you during your tenancy should be included in the house sale.
Although right to buy is primarily for current council tenants, you may be eligible if your house was sold by your local council to your current landlord during your tenancy.
How Much Discount Can I Get with Right to Buy?
The amount of discount you will receive with the scheme depends largely on the amount of time you have lived in your home, as well as the type of property.
If you live in a house, you can get a 35% discount on the property value after just three years. This percentage will rise by 1% annually after five years.
For example, if you lived in a council house worth £150,000 for 10 years, you would be offered a discount of 40%. You would get a discount of £60,000, meaning you would only be expected to pay £90,000 for your property.
However, you will be offered a 50% discount after just three years if you live in a council flat. This percentage rises by 2% for every year you have lived in the flat.
For example, living in a council flat worth £100,000 for 10 years would qualify you for a discount of 60%. This means you would be expected to only pay £40,000, saving a massive £60,000.
All discounts are capped at 70% (40 years for a house and 15 years for a flat), as well as a price cap of £103,900 if you live in London and £77,900 if you live outside of London.
How to Apply for Right to Buy
Once you are eligible for the scheme and you are happy to proceed, you will need to fill out an RTB1 form. This is a request to your landlord or association that you want to buy your house under the Right to Buy scheme.
The form will need to include the full address of your property, name of your landlord, names and signatures of all tenants, as well as a list of any improvements you've made while living at the address.
Once you have sent the RTB1 form (it is suggested to have your paperwork sent via recorded delivery), your landlord will have up to four weeks to reply with a yes or no answer. If your landlord denies the application, they will have to give reason as to why, which can be contested.
If your landlord accepts your application, they must then send an offer within eight weeks for a freehold property, and 12 weeks for if you're purchasing a leasehold house. Find out more about the difference between freehold and leasehold. This offer will include the property price (before discount), the discount percentage, any service charges and any issues that were found or come with the property.
After receiving the offer, you will then have 12 weeks to choose whether or not you wish to proceed with the buying process.
As the buyer, you have the ability to back out of the sale at any time and continue choosing to rent your property.
Can I Sell My Right to Buy Property?
You can sell your property at any time, buy repayment periods will apply. If you decide to sell within a year of buying your home under the scheme, you will be expected to repay the entire discount to the council.
Selling your property within one to two years of purchasing, you would be expected to repay four fifths of the discount to the council.
After five years of owning your property, you would not have to repay any discounts if you chose to sell.
You are legally required to offer your property to the previous landlord or housing association if you choose to sell your property within ten years of buying.
Differences in Wales, Scotland and Northern Ireland
While the whole of the UK does have Right to Buy in some form of another, there are some key differences in Wales, Scotland and Northern Ireland.
Right to Buy in Wales works in much the same way as in England, although you should expect a much lower discount on your property.So if you're one of many London house movers relocating to a cheaper part of the UK, you won't get as much discount in Wales. The Welsh government have stripped back this scheme over the last few years; council tenants looking to buy should expect a maximum discount of £8,000 on their property.
Right to Buy has been discontinued in Scotland as of August 1, 2016. Scottish council tenants who wish to apply for a discount will need to apply for Right to Buy before July 31, 2016.
Northern Ireland offer a maximum discount of 60% or £24,000 (whichever is less). You need to have lived in your property for a minimum of five years before applying.
Next Steps of Buying a House
This has been part of our buying guide. In our next article, we will look at building regulations. To learn more, read buying a house without building regulations approval.