In this brief guide, we are going to answer the question “Can I buy my council house?”
Can I buy my council house?
Yes, you can buy your council house using the right to buy scheme or the preserved right to buy scheme if your house is your main home, if it is self-contained (Which means you don’t share any part of your house such as kitchens or toilets with people outside of your household and if you are a secure tenant. A secure tenancy is one where there is a legal contract between you and the landlord).
If you are currently a council tenant and wondering if you can buy your council house then yes, you can indeed buy your house with the right to buy scheme which was set up in 1980.
It is not possible for all tenants of council homes to buy their council houses, only those who are eligible.
What is Right to Buy?
The statutory Right to Buy scheme is a scheme which was introduced in 1980. It allows council tenants to buy their council homes at a discount.
“The maximum discount is £108,000 in London and £80,900 elsewhere in England. Public sector tenants of between three and five years’ standing receive a discount of 35%, which increases by 1% every year beyond five years, up to a maximum of 70%, or the figures quoted above, whichever is lower.”
Can you buy your council house?
For you to be able to buy your council house you will have to be eligible for the right to buy scheme.
To be eligible to buy your council house you will need to:
Be debt free
Not have any negative records on your credit files such as county court judgements, bankruptcies or home repossessions
You must not have any possession orders on your profile
You must have been a council tenant for three years or more (This does not have to be three years of consecutive tenancy)
The council house must be your main residence or your only residence
Your home must not be scheduled for a demolition
Your council house cannot be a house which was built especially for disabled or elderly tenants
Can you afford to buy your council house?
The next question when considering if you can buy your council house is to look at you mortgage affordability.
To buy your council house with the right toby scheme you will need to use a mortgage and this means you must pass a mortgage lenders mortgage affordability checks before you are given a mortgage offer,
To do this you must be able to show that you can make your monthly mortgage repayments for the duration of your mortgage. Initially, a mortgage lender may give you a mortgage in principle which suggests that initial checks indicate that you may be able to afford the mortgage to buy your council house. The mortgage lender will then wait to receive a right to buy mortgage application from you and then provide you with a mortgage offer once they have done more thorough checks.
Initially, you may want to use a right to buy mortgage calculator to see what right to buy discounts you may be able to get with the right to buy scheme and what monthly mortgage repayments you may have.
When looking to answer the question “Can I buy my council house” you should also consider other costs which may be involved with buying a house such as your home insurance costs, council tax costs and potential stamp duty costs.
You should get quotes for theses costs and then add them to your potential monthly mortgage repayments to see if you can afford to make all the monthly repayments which may be due as well as afford the costs associated with buying your council house directly such as conveyancing costs and other mortgage fees.
If you are wondering if these are all the costs involved with buying your council house or council flat then remember some council houses or council flats could also have other costs involved such as annual service charges.
Making an application to buy your council house
Once you have determined that you can afford to buy your council house you should then prepare your right to buy application.
You should first check your eligibility for the right to buy scheme with your council or by using a Government scheme eligibility calculator. Once your council inform you that you are eligible you can then go on to make a right to buy application.
You will need to complete the right to buy application form(RTB1notice). You can do this online or by downloading a paper form. Once you have completed it you can then submit it your landlord.
You can either make the application to buy your council, house as a single person or as a joint application if you currently have a joint tenancy or by adding up to three names of the family members who currently live at the council house and have lived there for at least a year.
Your council landlord will get back to you within 4 weeks or 8 weeks if you have been a tenant with that specific landlord for less than 3 years.
Your right to buy offer
If your landlord confirms you as being eligible for the right to buy scheme they will send you an offer notice(S125). If you have a freehold property then this will take up to 8 weeks and if you have a leasehold property then it could take up to 12 weeks for your right to buy offer to come.
Your right to buy offer will tell you how much your council house is valued at and the right to buy discount you will receive. The right to buy offer will also inform you of any terms and conditions which you must abide by when buying your council house as well as list any structural issues with your council house.
If your landlord does not reply within the timeline or you are not satisfied with the valuation of the council house then you could appeal.
Right to buy discount
The right to buy discount you will be eligible for will depend on how long you have been a council tenant and whether your property is a house or flat.
The right to buy Discount for a house:
Basic discount: 35% (applies up to five years’ tenancy)
Additional discount over five years’ tenancy: 1% per year
Discount capped at: 70% or £82,800 (London £110,500)
The right to buy Discount for a flat:
Basic discount: 50% (applies up to five years’ tenancy)
Additional discount over five years’ tenancy: 2% per year
Discount capped at: 70% or £82,800 (London £110,500)
“What is the Cost Floor Rule?
The so-called ‘Cost Floor’ Rule may apply to the discount for which you are eligible under the Right to Buy scheme. If your council property was built or acquired by your landlord after April 2, 2012, they can claim back money they have spent on maintaining and repairing the property for the last 15 years or, otherwise, for the last 10 years. It is, of course, possible for the amount of money spent on the upkeep of the property to exceed any Right to Buy discount, in which case you would need to pay the full market value of the property.”
Right to buy calculator
You can use the right to buy calculator to see what discounts you can get to buy your council house through the right to buy scheme. Some right to buy calculators will also inform you of what the proposed mortgage repayments may be.
You should remember he right bo buy calculator will simply give you an indication of what right to buy discounts you may be given to buy your council house and what proposed mortgage repayments you may be able to get with a mortgage lender but these are in no way guarantees that you will be eligible for the right o buy scheme or a right to buy mortgage.
Alternative schemes to buy your council house with
Aside from the right to buy scheme, there are other government schemes which may be able to help you buy your council house.
You can check if you are eligible for these government schemes by using a government scheme eligibility calculator.
- 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.
Getting a mortgage to buy your council house
You may want to consider using an independent mortgage broker to get a mortgage to buy your council house
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
In this brief guide, we answered the question “Can I buy my council house?”. 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.