Right to Buy Explained

illustration of Right to Buy Explained

What is Right to Buy, anyway?

Right to Buy was set up by the UK government in the 1980s. It gives you the opportunity to buy your council home at a big discount. Currently, it’s only available in England. It exists in Northern Ireland, but the maximum discount is a lot lower.

To qualify for the scheme, you need to meet the following criteria:

  • The property you want to buy is your only home

  • The property doesn't have any shared facilities with other households (like a flat with a communal bathroom or kitchen shared with others on your floor)

  • You've had a public sector landlord for three years (councils, armed forces, NHS trusts/NHS foundation trusts)

  • You're not currently in any legal battles with a creditor (credit cards, loans etc)

You can apply for Right to Buy on the government website.

What discount do I get with Right to Buy?

Your Right to Buy discount depends on where you live and whether you’re in a house or flat. The maximum discount you can get is £84,200 or £112,300 if you live in London. This is regardless of how long you’ve lived in your home, or how much it’s worth. 

If you live in a house, you get a 35% discount if you've been a tenant for between three and five years. After five years, the discount goes up by 1% for every extra year you've been a tenant. 

If you live in a flat, you get a 50% discount if you’ve been a tenant for between three and five years. After five years, the discount goes up by 2% for every extra year you’ve been a tenant. 

In both cases, the maximum discount you can get is 70% – or £84,200 across England and £112,300 in London (whichever is lower). For example, if you’ve been a tenant for 10 years, you could buy your flat worth £100,000 for just £40,000 – using a 60% discount.

What’s the difference between Right to Buy and Right to Acquire?

They’re similar, but there’s a few differences between Right to Buy and Right to Acquire. 

Right to Acquire is meant for housing association tenants. Right to Buy is for council tenants. If you were a council tenant when your home moved to housing association ownership, then you'll need the Right to Buy scheme.

For Right to Acquire, the maximum discount available is £16,000. Again, this discount will vary depending on where you live. If you sell the property within five years of buying it, you'll need to pay back some or all of the discount you received. If you sell within 10 years, you'll need to offer it back to your previous landlord or another local social landlord. 

You can apply for Right to Acquire on the government website.

How are Right to Buy mortgages different?

Getting a Right to Buy mortgage is pretty similar to getting a regular mortgage. You can also apply with another person. Most lenders (but not all) will accept the discount you get on your property as a deposit

There isn’t a specific ‘Right to Buy’ mortgage product, so you’ll need to pass the same affordability checks as other mortgage applicants. Your income and spending habits will be looked at closely to see if you can afford the mortgage repayments. You’ll also have to pass the lender’s credit check.

If you have an undischarged bankruptcy or IVA, you won’t be able to use the Right to Buy scheme. If you’re self-employed, you might be asked to provide a few years’ worth of accounts. Read more in our bad credit and self-employed mortgage Guides. 

If you’re thinking of buying your council or housing association home, you should get advice from a specialist broker before starting a mortgage application. Especially if your situation isn’t straightforward. It’s best to work with someone who knows the market and has experience getting mortgages for people just like you. And that’s where we come in! 

We’ll match you to a specialist mortgage broker with experience in Right to Buy mortgages. Make an enquiry to get matched to the best advisor for you.

Do I need a deposit for Right to Buy?

It depends on the lender, but most mortgage companies won’t need a deposit to give you a Right to Buy mortgage. They’ll usually be willing to use the discount you received on your home as a deposit. Because of this, the Right to Buy scheme is a good way to get on the property ladder if you have a low income or can't save up loads of money.

However, some lenders might ask you to put down some cash up front (around 5-10% of the property value) regardless of the Right to Buy discount. That’s why finding the right lender is so important when applying for a mortgage. 

Can I get Right to Buy if I’m on benefits?

It’s possible! Some lenders will consider certain benefits as part of your income when looking at your affordability. However, you need to be aware that lenders will never consider housing benefits as part of your income. This is because you’ll stop getting housing benefits once you become a homeowner.

Can I get Right to Buy with bad credit?

Yes, it’s possible to get a Right to Buy mortgage with bad credit. But, it’ll be more difficult than if you had an ‘Excellent’ or ‘Good’ credit score. Bad credit is a term used if you have a low credit score. It can be caused if you’ve had any issues in the past with repaying credit cards, utility bills, a mortgage or any missing payments on any of your bills. 

Once your landlord has agreed to sell your council home to you, the Right to Buy mortgage application process is basically the same as it would be if you were buying a house on the open market.

Mortgage lenders will look at your credit history when you apply for a Right to Buy mortgage. Issues like CCJs or defaults will be more concerning to a lender than missed or late payments

Lenders will also look at the circumstances around your credit issues, like how much money was involved and how long ago it took place. You can get an idea of how much you could borrow on a mortgage with our Bad Credit Calculator.

Are there any downsides to buying my council home?

Owning your own home is the ultimate goal for many people, but there’s a few things to think about, especially if you’re buying council housing through the Right to Buy scheme. 

You should consider:

Mortgage repayments

Once you buy your home, you’ll no longer get your housing benefit. Consider whether you can comfortably afford your mortgage repayments without struggling. 

Maintenance costs

If something goes wrong, it’s on you to fix it! The council isn’t responsible any more for any repairs your home needs. If your home shares any communal areas, you’ll have to contribute to the upkeep. If you’re in a flat, you’ll probably have to pay a monthly service charge.

Insurance

You’ll need to get buildings insurance to protect your home from damage, including things like floods or fires. This will usually be a condition of your mortgage. 

Alongside the general costs of homeownership, there are a few risks which are specific buying council homes:

Demolition

Council houses, especially those in desirable areas, can be at risk of demolition to make way for new developments. If the council wants to demolish your home after you've bought it, there won’t be a lot you can do about it. The council will buy your home from you with something called a compulsory purchase order (CPO) and force you to move out.

Selling up

Your home isn’t guaranteed to go up in value. If you’re planning to sell your home in the future, a decrease in value could leave you out of pocket. Also, if you sell within the first five years of buying your home, you'll have to pay back some or all of the discount.

Housing benefit

Any housing benefit payments you currently receive will stop once you become a homeowner. You’ll need to be able to pay your mortgage in another way. 

Alternatives to Right to Buy

Although Right to Buy can be a great way to get on the property ladder, there are other options which you might want to consider.

Shared Ownership

Shared Ownership is where you buy part of a property and rent the rest. You take out a mortgage on the bit you're buying, then pay a reduced rent on the bit you don't own. You’re able to buy between 25-75%, and can buy some or all of the remaining share when you can afford to. 

This means you only need to put a deposit down on the bit that you’re buying, rather than the cost of the whole home. 

Read more about Shared Ownership.

Help to Buy

Help to Buy is a government scheme for first time buyers. It enables you to get on the property ladder with a 5% deposit. The government gives you an equity loan to put towards the cost of a new build home. 

The loan ranges from 5-20% of the property value (40% in London), and you'll need to purchase your home from a registered Help to Buy homebuilder.

Read more about Help to Buy.

5% deposit scheme

The UK government announced a new scheme for 2021, meaning you can get a mortgage with just 5% deposit. With the government helping mortgage lenders with part of the loan, it means you won’t have to save for a large deposit, or be restricted to new-build homes in order to get on the property ladder.

Read more about the 5% deposit scheme

Guarantor mortgage

If you don’t have a deposit and need a mortgage, you could consider a guarantor mortgage. Which means someone else agrees to legally pay your mortgage if you're no longer able. 

Beinga guarantor is a serious commitment, because their home will be secured against a part of your mortgage. This means they’ll have to pay any outstanding costs if your house is repossessed and sold by the bank. If you pass the affordability checks, you might not need to put down a deposit at all. 

Read more about Guarantor mortgages.

Buy with friends or relatives

Buying a house with friends or a family member is becoming a popular way to get on the property ladder. Combining deposits and sharing all the monthly living expenses can be  appealing. 

It’s a big commitment though - you'll be jointly responsible for the mortgage payments. If one of you can't pay, you'll have to cover the cost. You also can't sell the property unless everyone on the mortgage agrees.

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