For many, buying a home is simply not an option due to the deposit, fees and costs involved. It can be a very expensive process and many people will struggle to purchase a property without any assistance. But did you know that if you are a council or housing association tenant in England then you may be eligible to buy your home with a discount with the ‘Right to buy’ scheme?
Right to Buy is a Government scheme that allows secure tenants to buy their home at a discounted price, depending on eligibility.
The Right to Buy is available to:
- Secure tenants of councils
- Non-charitable Housing Associations
- Assured tenants of registered providers, such as Housing Associations.
The maximum discount available is £87,200 unless your home is in London which increases the maximum discount to £116,200.
Other eligibility requirements include:
• The home you are purchasing will be your main residence
• You don’t share rooms with any other people
(Please note there are more eligibility criteria’s to meet )
How does the discount work?
If you have been a public sector tenant for at least 3 years then you could be eligible for the Right to Buy scheme. In tenancy years 3-5, the discount available will 35%. After this, the discount increases by 1% each year of tenancy until a maximum discount of 70%. The discount is slightly different if you live in a flat. In tenancy years 3-5, the discount available is 50% and for each year after that the discount increases by 2% again up to a maximum of 70%. It is important to note that as much as the maximum discount is 70k, this is capped at the maximum discount amount of £87,200 (£116,200 in London).
Do you have to repay the discount?
Only if you choose to move within 5 years! If you chose to sell your property within 5 years of purchasing then you will have to repay your discount. But if you choose to sell agent the five years, you won’t pay back anything.
Please see the table below which illustrates the amount of discount to be repaid.
| Years Since Purchase | Discount To Be Repaid |
| 1 | 100% |
| 2 | 80% |
| 3 | 60% |
| 4 | 40% |
| 5 | 20% |
Also, it is worth noting that the percentage to be repaid will be based on the current market value rather than your original purchase price.
What is the process?
1) Check you can afford to purchase the property and pay any fees included
2) Complete a Right To Buy application form and send it to your landlord
3) Wait for your landlord to reply with an offer notice. This will tell you the property value, discount, the price, any structural problems with the property that they know about, and any terms and conditions
4) At this point you can look to apply for your mortgage, instruct a solicitor and get a property survey
5) Complete your purchase
Below is a Right to Buy calculator which can be used as a rough guide to help you work out the discount you may be eligible for under the current Right to Buy scheme. Please note that as the market value you enter will only be an estimate, the level of discount you could get may go up or down. You will only know exactly how much your home is worth once it has been valued by your landlord after you apply:
https://www.gov.uk/right-to-buy-buying-your-council-home/discounts
It’s important to remember that if you do qualify for Right to Buy, you must then carefully consider whether you can afford the costs of being a homeowner. If you do not keep up repayments on your mortgage your home could become repossessed.
We also appreciate that even those not needing to claim state or housing benefits may still be struggling to buy your first home. There are other government initiatives such as the lifetime ISA which allows you to save a tax-free lump sum that can be used to save for the deposit on your first home, and has the added boost of a government bonus of up to £1,000 a year.
How can BMI help?
If you are interested in any of the above why not book an appointment with one of our expert advisors to confirm your borrowing capacity. Call in on 01844 390910 to speak to one of the team today.
