If you have purchased ex-council property or are planning to buy the council property you live in, you will be interested in learning whether or not ex-council properties increase in value over time. This is the topic of discussion in the below article where we will discuss if council property increases in value and at what rate in comparison to private property. We will also discuss the pros and cons of purchasing council property and how soon it can be sold in the open market.

Do Ex-Council Properties Increase In Value?

Yes, ex-council properties increase in value over some time. However, this increase in value is not at the same rate as it would be in the case of private property. 

Despite this, estimates suggest that nearly 40% of council property is owned by private owners who have previously been council tenants and have now rented out the property to private tenants.

Council housing tenants who purchased council property when the Right to Buy scheme was initially introduced in the 1980s and 1990s have benefited most from an increase in the value of an ex-council property. 

Firstly, they were able to purchase council property under the Right to Buy scheme by availing discounts of 60% to 70% on the price of the property. Secondly, some of them who have sold an ex-council property in recent times have benefited from the inflationary trend in housing prices.

For instance, a group of council tenants purchased the flats that they were living in at Clarendon Place, Westminster. Some of the three-bed flats that were once owned by the local council were sold by ex-council tenants for prices between £1.8 million and £2.25 million. 

Meanwhile, some other ex-council tenants made a profit of over £1.6 million when they sold their ex-council property just 6 years after buying it.

Another example can be given of ex-council houses in Shepherdess Walk, Hackney where a council housing tenant purchased the property they were living in for £171,000 in the year 2000. Later on, they were able to sell it for £1m in 2014. Meanwhile, another council property was purchased under the Right to Buy scheme for £220,000 in1997 and was sold for £1.94m in 2013.

Therefore, it may be safe to say that while ex-council property does not increase in value as much as the private property does, it remains an attractive option for tenants looking for affordable housing; especially in times of high inflationary trends and rising housing prices. 

Why Do Council Housing Tenants Purchase Council Property?

The main reason why council housing tenants purchase council properties is that they are much cheaper in value as compared to similar properties available in the private sector. According to the Royal Institution of Chartered Surveyors, ex-council houses are generally cheaper by 20% as compared to private properties.

In addition to this, even though the new homeowners may not be able to change or update the structural design of council property as compared to private homeowners aiming to rent out their property, they will be able to attract private tenants who are looking for an affordable and spacious place to live in. 

Another point to be considered is that council houses are freehold. This means that in addition to the property, buyers also own the land that it stands on. Meanwhile, council flats are available on a 125-year lease.

If you have bought council property, you can remortgage it only after you’ve kept possession of it for a minimum period of five years.

Since council property is built on a more sturdy structure; once it has been bought by a private owner, the original conservative design and interiors can be customised according to their liking and budget. 

However, an increasing number of council housing tenants started purchasing council property in the late 1990s to rent it out or sell it in the private real estate market at a profit; which is against the purpose of why affordable housing was made available by the UK Government in the first place. Therefore, the Right to Buy scheme was halted to discourage the conversion of council property to privately rented premises.

How Soon Can You Sell Council Property After Purchasing It?

Although you can legally sell your council house anytime after the purchase and completion of documentation for transfer for ownership; however, if you sell it before the end of a five-year term, you will have to repay the discount that you availed under the Right to Buy Scheme. 

Similarly, if you sell your council house before the end of a ten-year term, you will first have to offer it for sale to your council authorities or social housing landlord before you list the property for sale in the open market. 

If the landlord does not agree to buy the property or there is a conflict in the price that you offer versus the one they are willing to pay and there is no settlement between both parties within 8 weeks, you can list your council house for sale in the open market.

How Can You Find Out If A Property Is Ex-Council Property?

There are mainly two ways for you to find out if a property was previously owned by the council authorities:

  • you can either ask the estate agent through whom you are looking to purchase the property; or
  • you can check the details of the previous possession of the property by purchasing a copy of the title deed from Land Registry for a nominal fee

However, this information will only be available to you if the property that you are inquiring about is already purchased by you or is currently listed on the market and is available for sale.

If you have the exact address of the property you can visit the information section of the Land Registry website, enter the postal address and get details about the property’s previous ownership as well as the extension of its general boundaries. 

The service can give information regarding the current owner of the property free of cost; however, to download the title register of a property you will need to pay a fee of £3 for each copy of a title register or a title plan. For this purpose, you will need an email address, and a debit or credit card. 

Conclusion:

The above discussion makes it clear that council properties increase in value over some time. However, their value will not increase as much as that of private property listed in the real estate market. It is also noteworthy that council property is intended to provide an affordable housing solution to low-income households and is sold at a discounted rate by councils to encourage home ownership. 

References:

Buying an ex-council house in London: the pros, cons and what to avoid | Evening Standard

Hundreds of Ex-Council Tenants are now Property Millionaires!

How can you tell if a house is ex-council? – Page 2 — MoneySavingExpert Forum

What was missing from this post which could have made it better?