Preserved right to Buy (A complete guide)

What is the preserved right to Buy?🎈

The preserved right is a legal right given to former tenants of local authority tenants with a secure tenancy to buy their home.If you were a secure council tenant and your home was transferred from your council to another landlord such as a housing association then you might have a preserved right to buy.

This only applies if you were living in the home when it was transferred. Your current landlord should be able to tell you if you have the preserved right to buy. You will not be eligible if you moved to a home owned by a different type of landlord.

The Right to Buy only applies if you were a tenant with these local authorities on these dates: West Berkshire District Council 4 December 1989 Christchurch City Council 28 March 1991 Vale of White Horse District Council 9 February 1995 Basingstoke & Deane Borough Council 20 March 1995.

The preserved right to buy scheme is only available in England and you can get a maximum discount of £78,600 outside London and £104,900 in London.

Properties not included in the Preserved Right to buy

• Specialist housing for the elderly
• Housing for the disabled or those with mental issues
• Temporary housing
• Lettings in connection with employment
• Properties scheduled for demotion

To be eligible for the preserved right to buy you need to:

• have spent a minimum total period of 2 years in social housing or armed forces accommodation

• You occupy your house as your only or principal home

• A housing association owns the freehold or has sufficient interest in your current property to grant a lease. There are some other cases where the right to buy may apply covering the following types of cases:

• If you are a joint tenant of someone who may be able to exercise the preserved Right to Buy

• If you were assigned the tenancy by a member of your family who immediately before the assignment would have been eligible; or

• If you became the tenant of your house under divorce legislation in place of a person who would have been eligible; or

• If you are a family member of a previous sole tenant who would have been eligible and inherited the tenancy

• If you are the partner of a deceased tenant who acquired the preserved Right to Buy by succession

• Please note a family member can join in the Preserved Right to Buy if they can prove they have lived in your home for at least 12 months before you apply. This 12 month period does not apply to spouses or civil partners.

Who is not eligible for the right to buy under the Voluntary sales policy? ⛔

You may not exercise the right to buy if one or more of the following applies to you:

• A housing association is not your landlord

• You have not spent a minimum total period of 2 years in social housing or armed forces accommodation (or 5 years if you were a public sector tenant for the first time on or after 18th January 2005)

• You do not occupy the property as your only or main home

• Your home is let to you in connection with your employment

• Your home is designed for people who are physically disabled, for people with a mental health problem, or who have other special needs, and is one of a group of such properties.

• Your home is particularly suitable for elderly residents. Please ask for more details from your landlord of whether this applies to your home.

• Where you have been served a notice that your landlord intends to demolish your home within a specific period

• Where a court order is made which means you have to leave your home by a specific date, or if the terms of a suspended court order are breached

• If you are bankrupt

• If your tenancy has been temporarily demoted to an assured shorthold tenancy in the case of anti-social behaviour.

How do you begin the right to buy process under the voluntary sales policy?🍉

• Your landlord will supply you with an application form which you must complete and return for them to start the process.

• They will let you know in writing if you qualify for the preserved right to buy within 4 weeks of receipt of your application (8 weeks if the qualifying period includes time with another landlord)

• If you qualify for the right to buy a valuer will contact you and arrange to visit your home to carry out an open market valuation. It is worth noting that any improvements you have made to the property will not be included in the valuation.

• Within 8 weeks(if you live in a house) or 12 weeks(if you live in a flat) your landlord will send you a written offer notice(section 125 notice) setting out the sale terms. This offer will usually describe the property, the price it is offered for and any defects found on the property during the valuation.The offer notice will also include any discount you are entitled to which allows you to buy the property under market value.

If you are told that you are not eligible for the preserved right to buy then you can contact the citizens advice bureau for more advice or engage the services of a solicitor. Alternatively, you can write to the Residential Property Tribunal Service, 10 Alfred Place, London, WC1E 7LR.

You must also return your decision to buy or not to buy within 3 months if not you will lose your right to an independent district valuer. The housing association will usually send you a reminder before this timeline elapses.

If the housing association delays the sale by not sending you the acceptance form and your offer notice within the times mentioned above or they delay the sale in some other way, you may be allowed a reduction in the purchase price. To receive this you must complete the initial notice of delay(Form RTB6) giving them 28 days to issue a counter-notice and resolve any delay. If the delay remains after this period, then you may serve an operative notice of delay(Form RTB8). This allows any rent that you pay during this period of delay to be taken from the purchase price if you still go ahead and complete the sale.

How are properties valued for the preserved right to buy?🏠

• Your landlord will instruct an independent valuer who will produce a valuation on the property

• Your landlord will then calculate how much discount on the price you are entitled to

• You must have lived in the property for a minimum 2 years. This could be a local authority or armed forces accommodation (or 5 years if you were a public sector tenant for the first time on or after 18th January 2005). The initial 2 year period entitles you to a 44% discount if your home is a flat or 32% if your home is a house. For each additional year above the minimum qualifying period you are entitled to further 2% discount for a flat and a further 1% discount for a house.

• The discount can be no more than 70% of the open market value if it is a flat and 60% if it is a house. However, discount entitlement can never be more than a maximum determined by the Government, which varies according to the region in which your home is located. Your landlord will advise you of the maximum discount available to you in your area on request.

• If you are not happy with the open market valuation you can ask your landlord to instruct the District Valuer to undertake a final valuation, within 3 months from the date of your offer. The District Valuer’s valuation is final and will be the value used to calculate the purchase price even if it is higher than the first valuation.

• If your home is a flat (or a house that benefits from communal facilities) you will also pay service charges. This is for your contribution to day-to-day expenses (lighting, cleaning etc), and any contribution you may have to make to substantial major works and improvement costs (lift repairs, roofing repairs etc) that will add to the value of your home. Your offer notice will contain details of service charges, and for certain service charges, there are limits for the first 5 years of your ownership.

• You must pay any outstanding debts owed to your landlord during the sales process if not they are within their right not to complete the sale with you. You will have to arrange a mortgage if you are not paying in cash. There will be costs involved with this such as mortgages fees, conveyancing fees, property surveys, home insurance and stamp duty.
• You will also have costs associated with running your home all taken care by yourself including your regular mortgage payments, council tax, any ground rent or maintenance fees.
• You will no longer be eligible for any housing benefits as you now own and occupy your own home. You might be able to claim income support but this usually takes 9 months before a payout is received once you have applied. Elderly people will have the value of their homes taken into account when considering if they are eligible for financial help in regards to their residence.

Your right of appeal for preserved right to buy

If your preserved right to buy application is refused you have the right to appeal within 56 days. Details of how to apply will be included in any offer letter sent to you by your landlord

Selling your Preserved Right to Buy home👨‍👧

You can sell your home at any time you want, If you sell it within 5 years of buying it you will have to repay some of the discounts.

If you sell within the first year you will have to pay all the discount.

If you sell in the 2nd year you will have to pay ⅘ of the discount.

If you sell in the 3rd year you will have to pay ⅗ of the discount.

If you sell in the 4th year you will have to pay ⅘ of the discount.

If you sell in the 5th year you will have to pay ⅕ of the discount.

The discount will be taken as a percentage of the property value when resold. You will not be required to pay any discount after 5 years of owning the property.

You will have to offer the property to your previous landlord if you sell it within 10 years and it is in an area of natural outstanding beauty. If your landlord takes up the offer they will have to pay you the full market value.

You can find further information by contacting the Department for Communities and Local Government or here

Alternatives to the preserved right to buy

• Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
• Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
• Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
• Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
• Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
• Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
• Right to buy– allows you to buy your home at a discount price.
• Preserved right to buy- same as above.
• Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

In this brief guide, we discussed the Preserved right to buy. If you have any questions or comments please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.