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Buying My Council House
Do you live in rented public sector accommodation and wonder if it could be possible for you to buy and fully own your home? Since its introduction in 1980, the Government’s Right to Buy scheme has helped millions of people living in council housing to purchase the homes they currently rent and start to store equity in their property by paying off a mortgage rather than continuing to pay money to their landlords.
However, some people may be put off by the Right to Buy process, which on the surface can appear to be quite complex, but in reality, it’s just a series of steps to pass through. In this section, we’ll go through the stages you’ll deal with when buying your council house property, and hopefully shed enough light to encourage you to take the leap.
Am I Eligible to Buy My Council House?
The first question that anyone in your position asks is always around eligibility. Will you be allowed to buy your council house, and if so, what are the criteria? Some ask ‘Can I buy my council house?’ wondering if local authorities will be willing to let it go. The answers will always revolve around the fact that you have a right to buy your own home, it’s just a matter of finding out exactly how.
To qualify, you must have been a public sector or council housing tenant for at least three years, although this time does not need to have been consecutive or in the same property. If the council sold your home to a private social housing landlord, such as a Housing Association, then you must have been a tenant at the time of the sale.
If you can tick that first box, then you need to confirm that you do not have:
- Any legal problems with debt.
- Any possession orders outstanding against you.
The property must also conform to a few criteria:
- It must be your only or main place of residence.
- It must not be housing specially built for elderly or disabled tenants.
- It must not be scheduled for demolition.
If you and your home meet all the above basics, then we can move on to the next stage.
Can I afford to buy my council house?
The financial aspect is something that you should definitely consider early on in the process. Going over your budget, your anticipated income, outgoings, expenses and domestic costs is vital in ensuring you will have the cash flow to cover fees for the purchase process and maintain a mortgage on an ongoing basis. This is something that a mortgage lender will do anyway, so it will pay to be ahead of the game and perhaps spot any gaps before presenting your application.
If you’re looking to buy your council house property, it’s highly likely that you will need to obtain a mortgage to fund the purchase, and you need to make sure it will be affordable. If you don’t know the purchase offer and discount figure, then make your best estimate and use this as a rough basis for researching what your monthly repayments are likely to be – the numerous online mortgage calculators could come in useful for this, or you could speak to a mortgage adviser who will be able to give you a fairly accurate idea. It’ll be quite revealing to see how this figure compares to what you pay in rent each month.
There are many other costs in your budget that won’t change, like your regular bills (allowing for customary annual increases), but there are other expenses that may need to be included such as building insurance and life protection insurance, if you do not already have it. If you are buying your council flat or maisonette, then you will probably also have to allow for an annual service charge. With everything brought together on one sheet, you should now be able to see what monthly mortgage payments you will be able to afford.
Finally, make allowances for the one-off costs of the purchase – this will be fees for solicitors, surveyors or the valuation, mortgage arrangement and possibly Stamp Duty Land Tax. If the budget shows that everything is within your means, then it’s time to move on to the next stage.
Right to Buy application form
If you meet the eligibility criteria and know that your finances are on a firm enough footing to support the purchase costs and mortgage payments, then now you can feel confident in making the application to buy your council property.
You need to use the Right to Buy application form (RTB1). This is available to complete online on the Government’s website and you can then print it out, or you can ask your landlord to give you a printed copy.
You can make a solo application if you are the sole listed tenant. It’s possible to make a joint application including the names of everyone in a joint tenancy, or the names of up to three family members who have lived with you at the property for the last year or more. Send the completed form to your landlord by recorded or registered delivery.
Your landlord must respond to your application within 4 weeks (or 8 weeks if they have been your landlord for less than three years). If they decline your application, they must give you a reason explaining their decision. If they accept it, then they will need to make you an offer and we proceed to the next stage.
Right to Buy Offer
Your landlord will need to get your home valued by a qualified surveyor, and will then be able to send you a formal offer notice (an S125). They must do this within 8 weeks if the property is a freehold, or 12 weeks for a leasehold property.
This offer will detail the value of the property, the discount amount, how that was calculated and the price they believe you should pay. It will also include a description of the property, any associated land included in the price, any terms and conditions, any existing problems with the structure of the property, and (if a flat or maisonette) an estimate of the service charges for the first five years.
What will be my discount for Right to Buy?
The discount you are entitled to on the price of your home will depend on the type of property, where you are and how long you have been a tenant. The basic calculations are as follows:
Discount for a house:
- Basic 35% discount after being a tenant for three to five years.
- +1% for every additional year of public sector tenancy over five years.
- Maximum discount: 70% (capped at £84,200 or £112,300 in the London boroughs).
Discount for a flat or maisonette:
- Basic 50% discount after being a tenant for three to five years.
- +2% for each additional year of public sector tenancy over five years.
- Maximum discount: 70% (capped at £84,200 or £112,300 in the London boroughs).
What happens with the Right to Buy offer?
If your landlord does not respond to your application or does not make an offer within their deadline, you have the right to appeal.
You have 12 weeks to respond to their offer. During this time, you have the right to get an independent valuation carried out if you think the landlord has overvalued your home and can also appeal. As mentioned, if they refuse your application, they must give a valid reason why.
Arranging a Right to Buy Mortgage
If everything in the preceding stages has gone to your satisfaction, then you’ll need to look into arranging a mortgage or loan to cover the purchase of your home. As part of the process, you’ll also need to get a survey done on the property (or the lender may cover this if part of the arrangement) and you’ll also need to get a solicitor in place.
When applying for the mortgage, it’s worth considering what improvements you may want to make to your home. If you are thinking your ex-council house, flat or maisonette needs a new kitchen or bathroom, then you could apply for a mortgage that is a little more than your purchase price to cover this cost. As the difference between the property value and your purchase price is going to be substantial, there is likely to be some leeway from the lender on extra funds for work that will add value to the property, allowing for the affordability assessment on your monthly instalments, of course.
Right to Buy Experts
At this stage in your journey to buying your council house home, you’ll be likely to benefit from talking over your needs and aims with a qualified, experienced independent mortgage broker.
Our team at The Mortgage Centres includes specialists in every type of mortgage, including those for Right to Buy properties. They have access to thousands of mortgage products across the breadth of the market, including several from lenders you will not find online or on the high street, often on an exclusive basis.
This puts us in a strong position to not only source exactly the right mortgage for your circumstances, but also to help with the application, recommend legal advice and help you plan for what the future might bring.
Want to find out more? Simply get in touch for a free, quick, no-obligation discussion about your circumstances and your options.