Understanding the Right to Buy Scheme in the UK

The Right to Buy scheme is a homebuying scheme in the UK that allows most council tenants to buy their council home at a discount. It was introduced in the 1980s and has since enabled numerous tenants to become homeowners.

Here is a handy guide containing what prospective applicants need to know about the Right to Buy scheme.

Benefits of Right to Buy

Affordability

One of the biggest advantages of the Right to Buy scheme is the significant discount it offers prospective homeowners. The longer individuals been a tenant, the bigger the discount applicants could obtain, making homeownership more affordable and realistic for many.

Investment Opportunity

Owning a home can be a smart investment. Property values generally increase over time, so buying a council home at a discounted rate could be a smart financial move.

Stability and Freedom

Homeownership brings stability and the freedom to make changes to a property (subject to planning laws). Those who become homeowners through the Right to Buy scheme will no longer have to deal with landlord restrictions or fear eviction due to redevelopment or sale.

Eligibility Criteria

• Applicants must be a tenant currently living in a council or public sector property in the UK.
• Applicants need to have been a public sector tenant for at least three years (not necessarily 3 consecutive years).
• The property must be the tenants primary place of residence.

 

Certain types of properties are exempt from the Right to Buy scheme, including homes suitable for elderly people, temporary housing or accommodation, and homes due for demolition.

Discounts Under the Right to Buy Scheme

The Right to Buy scheme offers a variation of discounts based on the property type and the tenants individual circumstances. The more years tenants have rented, the bigger the discount, however, there’s a cap set by the government.

 

Types of Properties and Associated Discounts

• Houses: Tenants with 3-5 years under their belt could get a 35% discount. Each extra year adds another 1% to the discount, allowing a maximum of 70%.
• Flats: Starting with a 50% discount for 3–5-year tenants, each additional year adds 2%, up to the maximum limit of 70%.

 

That being said, there’s a limit to these discounts depending on where tenants are living in the UK.

As of August 2024, the maximum discount that can be obtained is £102,400 across England, and for homes in London £136,400. The discount cap increases every April in line with the consumer price index (CPI).

How can prospective homeowners apply for the Right to Buy scheme?

1. Applicants need to request an application form (RTB1) from their landlord.
2. Complete and return the form to their landlord.
3. Landlords are obligated to respond to the completed application form within a specified time frame, stating whether you have the Right to Buy.
4. If your application is successful, the landlord will present applicants with an offer.

 

Once an offer is presented to applicants, it is advisable they seek advice from a professional. This offer can be checked and explained to avoid any uncertainties.

Conclusion

The Right to Buy scheme offers a pathway to homeownership for many council tenants, with the potential for financial gain and increased personal freedom. However, it’s important to weigh the responsibilities and risks before deciding to purchase.

If you’re considering the Right to Buy scheme, it is wise to check your eligibility, understand the costs involved, get in touch with a member of our team to discuss whether the Right to Buy scheme is the right option for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 15.08.2024

The Mortgage Society is a trading name of Just Mortgages Direct Limited which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority.