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What is Right to Buy?

The right to buy was a scheme first introduced in 1980 and allow council tenants to purchase their rented homes at a reduced price so they can become homeowners.

Owning your own property has many benefits, better financial security as well as being able to pass down the property to your children are often mentioned by borrowers that are keen to purchase instead of continuing to rent from the local authority.

How do you qualify for the Right to Buy scheme?

You are able to purchase your council home providing you meet the following criteria:

  • The property is your main residence.
  • You have been a tenant within the public sector for a minimum period of 3 years and hold a secure tenancy agreement with the landlord (the council)
  • The property is considered self-contained and only homes your household.
  • You have no ongoing debt related issues showing on the insolvency register such as a bankruptcy or an Individual Voluntary Arrangement (IVA)
  • If you have bad credit and applying to with a bad credit, the lender will require all named persons on the tenancy agreement to be named on the mortgage application.

How long do you need to be a tenant before you can apply for Right to buy?

You will need to be a council tenant for a minimum of 3 years if you rent a flat or 5 years if you rent a house. If you are keen to own the property instead of just renting this scheme could be perfect for you. 

What is the difference between Right to Buy and Right to Acquire? 

Although both Right to Buy and Right to Acquire are housing schemes that allow tenants of social housing to purchase their homes there are some key differences to understand.

Eligibility:

Right to Buy: This scheme is aimed towards council tenants who are offered the opportunity to purchase their home with substantial discounts.

Right to Acquire: This scheme is offered to tenants renting from Housing Associations. The properties are managed and owned by registered social landlords and whilst they do still offer discounts they are not as generous as Right to Buy, with a cap set at £16,000. 

If you have bad credit and looking to purchase under the Right To acquire scheme you will likely find it more difficult as there are a lot less lenders offering Right to Acquire mortgages and the lenders that do will require you to substantially contribute towards to the deposit as the discount is capped at £16,000

How long will Right to buy be around for?

Nobody knows how much longer the scheme will continue to be offered to council tenants due to reduced social housing stocks as well as the pressures the governments face to end the scheme. The Right to Buy scheme in Scotland ended in July 2016, and in Wales it finished in January 2019.

If you live in a council property and qualify for the Right to Buy scheme and have desires to buy your home from the council then our advice is simple, act now if you can before it’s too late because there is a change in government policy.

How much discount can you qualify for?

Buying your council home can be a very attractive proposition as the discounts which can be awarded are substantial and can be as high as £96,010 for a house or a flat outside of London and as much as £127,940 within the London boroughs.

Right to buy restrictions

If you sell your council home within 5 years of purchasing, you will need to pay back some or all the discount which you had received if you sell within the first 12 months. The exact amount will depend on how long you have owned the property for.

Also, even when your 5-year discount period has ended you must still offer the property back to the council or housing association before you are able to put the property on the open market if you have owned it for less than 10 years.

How much deposit will you need for your mortgage?

It is likely in most cases that you will not have to use your own funds to add to the deposit due to the discount being substantial. Most lender will accept the discount used as a 100% source of deposit.

Can you still apply for Right to buy Mortgage with bad credit?

Absolutely! If you have bad credit and looking to buy your council home, then the Right to Buy scheme could be perfect for you as the discount awarded to you will enable you to have a substantial discount to support your application. 

Depending on the level of adverse showing on your credit file could mean your application may need to be submitted to a specialist lender but the good news is there are plenty of lenders will accept your application even with bad credit.

Associated costs when buying via the Right to Buy scheme.

Valuation fees – Even though the council would have provided you with a valuation for the property when granting your Right to Buy offer, the lender will still want to instruct their own surveyor to attend the property to ensure it meets their property criteria, is in good condition and worth the money you are paying for it.

Estimated costs – Free to £500 

Solicitors’ fees – You will need to instruct a solicitor to act both for you and the lender to ensure all conditions of the mortgage are met. They will also be responsible for registering you as the owner at land registry.

Costs can vary greatly depending on which council you are buying from and which lender you are applying for a mortgage with. All lenders will have the own their own unique requirements which they will expect to be undertaken and completed before you can draw down the funds to pay the lender.

Estimated costs £1,200 – £2,000

Mortgage broker fees

We always recommend working with a mortgage advisor which understands the scheme so is best placed to advise & support you accordingly. If you also have bad credit, then work closely with a specialist bad credit mortgage advisor such as ourselves as we understand which lenders will consider your application and what is required to ensure you receive the best possible mortgage for your circumstances.

Estimated costs Free – £1,995 depending on the complexities of the case and how many hours are required to secure you a binding mortgage offer.

Do you have any questions? Contact us today!

If you would like to understand more about the Right to Buy scheme or if you would like to get the ball rolling contact us today on 01268 294 777 to find out what are the best options are available for you

Do you qualify for a mortgage?
Find out if you qualify in less than a minute. It won’t affect your credit score!
Get started

Getting you the right mortgage
We are confident that we can find you a lender, but you may not feel it’s the right mortgage for you. Whether the repayments are too high, or the deposit requirement is too much, we will help you to understand what you need to do, to get the right deal.

No broker fee mortgage
We appreciate the financial benefits of a mortgage from a high street lender, so will help our clients understand what it takes to get one.  Once their credit file is repaired and the mortgage we previously arranged for them is up for renewal, we will help them celebrate their successful application with a high street lender, by waiving our broker fee.

Do you qualify for a mortgage?
Find out if you qualify in less than a minute. It won’t affect your credit score!
Get started

Getting you the right mortgage
We are confident that we can find you a lender, but you may not feel it’s the right mortgage for you. Whether the repayments are too high, or the deposit requirement is too much, we will help you to understand what you need to do, to get the right deal.

No broker fee mortgage
We appreciate the financial benefits of a mortgage from a high street lender, so will help our clients understand what it takes to get one.  Once their credit file is repaired and the mortgage we previously arranged for them is up for renewal, we will help them celebrate their successful application with a high street lender, by waiving our broker fee.


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