Right to buy mortgage (Eligibility & process)

Who is a right to buy mortgage broker?

A right to buy mortgage broker deals with the right to buy mortgage applicants as a specialist type of mortgage for council tenants looking to buy their council home under the government’s right to buy scheme.

What is the Right to buy scheme?

The right to buy scheme allows council tenants to buy their homes at a discount price if they have been council tenants for a minimum amount of time. This scheme has also been piloted for council housing association tenants. This scheme was initially introduced by Margaret Thatcher. The right to buy mortgage is a bit more complex than a standard mortgage and a right to buy mortgage broker with sufficient experience of right to buy mortgages will be able to assists you in purchasing your council home.

The discount you will receive on your right to buy property will depend on factors including the property type (i.e. whether it’s a house or a flat) as well as its location and value at the time of the right to buy mortgage application

A right to buy mortgage broker will advise you on your eligibility for the right to buy scheme and how you want to fund your mortgage deposit. In some cases right to buy mortgage lenders will let you use your discount on the home as your equity mortgage deposit for the right to buy mortgage which means you do not have to put any more money down towards your right to buy mortgage.

How does the Right to Buy scheme work today?

The Right to Buy scheme is available to tenants of council authorities, registered social landlords with secure tenants, fire authorities, passenger transport executives, Government Departments, the NHS and most public bodies.

How much deposit can you get with your right to buy property?

• The Right to Buy scheme allows council tenants who have lived in their accommodation for a minimum of 3 years to buy their home at a minimum discount of 35% of the property value.
• Tenants who have had occupancy for more than 5 years will receive an additional discount of 1% for every extra year up to a maximum discount of 70%.
• The right to buy discount then rises to 2% for those who have lived in flats.
• The maximum right to buy discount is ￡78,600 across England and 104,900 in London boroughs.

If your landlord has invested any money into your council property, the right to buy discount you’re eligible for will likely be affected. It is even worse if the amount they’ve spent on maintenance or home improvements exceeds the right to buy property’s value. In this case, you won’t be entitled to any right to buy discount.

To begin the process contact your landlord after which you will need to fill in an application form to start the process.

Do you have the right to buy?

Yes, as long as you are a council tenant and meet the eligibility requirements above. You can confirm your eligibility by speaking to your council or a right to buy mortgage broker.

The right to buy scheme applies for people who:

• Who don’t share any rooms with people outside your household
• It is your main and only residence
• A legal contract exists between you and the landlord
• Your landlord has been a public sector landlord for at least 3 years, which necessarily doesn’t have to be consecutive.

If your home was owned by the council previously and they sold it to another landlord whilst you were living in it, you may still qualify for the Right to Buy scheme. This is called ‘Preserved Right to Buy‘. Ask your landlord if this applies to you.

You can also make joint applications or applications with family members who have lived with you for the preceding 12 months.

The scheme is only available in England. The Welsh Government has stopped the right to buy scheme as of 26 January 2019. The Scottish government has ceased operating the Right to Buy scheme.

Can I get a Right to Buy mortgage?

You should firstly be aware that you will not receive any housing benefits once you become a homeowner with a right to buy mortgage . There is no specific mortgage for the right to buy scheme.

To be eligible for the right to buy scheme and in theory a right to buy mortgage you will need:

• The right to buy property should be your only or main residence
• The right to buy property should be self-contained (the tenant doesn’t share facilities such as bathrooms and kitchens with other people outside of their household)
• You must be a secure tenant (i.e. there is a legal contract between you and the landlord)
• You must have had a public sector landlord for three years (not necessarily 3 years running)
• You must be based in England (Wales and Northern Ireland have separate schemes and the Scottish equivalent of Right to Buy has now been abolished)

What is the right to buy mortgage process like?

The right to buy mortgage process is the same and you will need to meet the affordability criteria set by the lenders as well as have a suitable mortgage deposit to purchase a property under the right to buy scheme. Always check your credit score as it might need to build more credit before you apply for a mortgage.

Try a right to buy calculator to see what your costs are likely to be prior to applying for a right to buy mortgage. Costs like stamp duty, conveyancing costs, property survey costs are definitely worth considering before thinking of a right to buy mortgage.

Don’t forget, If you buy a flat with a leasehold, you will be responsible for ground rent and maintenance.

For more detailed information on eligibility and exceptions to the Right to Buy mortgage and scheme, you can download Your Right to Buy Your Home – A Guide (PDF).

The Right to buy process

In this section, we are going to discuss the right to buy process in a little bit more detail.

Before going into detail about the right to buy process you should be aware that your landlord is obliged to process your right to buy application in a very timely fashion.

If your landlord does not meet the timelines set by the Government and causes you unnecessary delays without any valid reason then you could get a reduction in the sale price.

You can check what to do about delays to your application.

There are six main steps to the Right to Buy process. They are listed below:

Outline your costs and get Right to buy mortgage advice

You should outline what the costs of homeownership are going to be for you. Getting Right to buy mortgage advice will also be a very good idea at this point.

Complete the right to buy application form

Your next step will be to complete the right to buy application form (RTB1). You can do this online or ask your landlord for a printed copy of theRTB1 form.

If filling in the right to buy application form is proving difficult for you then you will need to contact a right to buy adviser who can assist you in filling in the RTB1 form.

Once you have filled in the form you will need to sign it and send it you your landlord through recorded delivery so you get a tracking number and have proof of delivery.

This will allow you to know what date you can start counting from when considering your right to buy application submission date.

Wait for your landlord

The next stage of the right to buy process is waiting. Your landlord must now get back to you within 4 weeks. Your landlord must state whether younhave the right to buy within these 4 weeks but will have up to 8 weeks if you have been with your current landlord for less than 3 years. If your landlord does not get back to you within 4 weeks or 8 weeks (based on your circumstances) then you should follow these steps for further help.

You receive your right to buy offer

Once your landlord has gotten back to you, they will usually then send you an offer notice( also referred to as S125) within 8 weeks for a house and 12 weeks for a leasehold property.  

The offer notice will state what the landlord has valued the property at and any discount that you are eligible for.

If you think the valuation is wrong or you are not happy with it then you can appeal the valuation as part of the right to buy process.

The offer notice will also list any structural defects found with the property and the terms and conditions of the sale.

If the landlord has missed the deadline to send you an offer notice you can follow these steps.

Accept the offer & Get mortgage advice

Once you receive your landlords offer you will have up to 12 weeks to accept or decline the offer. At this stage, you can conduct your own property survey to ensure the property you are buying is suitable and look to get a mortgage offer from a  right to buy mortgage lender.

Completion of your right to buy purchase

The final stage of the right to buy process would be for you to complete the right to buy purchase. 

You should ensure you are happy with your landlord’s terms and conditions before completing the sale.

A conveyancer will assist you in explaining your rights and any legal agreements before you sign them.

Potential issues with the right to buy mortgage process:

Being eligible for the right to buy scheme is one thing but you may end up facing difficulty when trying to prove your eligibility for a right to buy mortgage due to a few reasons.

• Your right to buy mortgage broker will likely alert you if you are retired and inform you that you may struggle to find a right to buy mortgage lender willing to lend to you except you can prove to the right to buy mortgage lender that you can stay on to of your payments during retirement. Most right to buy mortgage lenders will restrict their lending to people aged 75 and above but some right to buy mortgage lenders will ignore this and even lend to people over 85.
• If you are self-employed your right to buy mortgage broker may need to have some experience in dealing with right to buy applicants who are self-employed. This is because proving your income to a right to buy mortgage lender might be more difficult. Self-employed mortgages fall into the specialist mortgages categorisation and having a right to buy mortgage with them may further complicate things and call on the full experience of a right to buy mortgage broker.
• If you have bad credit then getting a right to buy mortgage is possible but your bad credit will further complicate things and your right to buy mortgage broker will have to put on his or her bad credit mortgage broker hat to deal with your case. Bad credit could include things such as IVAs, Bankruptcies, county court judgements, defaults plus more. You should look to build your credit prior to applying for a right to buy mortgage.
• If the right to buy property has ‘non-standard’ construction then you may face difficulty getting a right to buy mortgage. This is the case as some of England’s unique council properties may have elements of non-standard construction such as thatched roofs and timber frames. A specialist lender may offer you more favourable rates as some right to buy mortgage lenders consider non-standard construction properties higher risk.

Do I need a deposit for a right to buy mortgage?

You will typically need to put a mortgage deposit down for your right to buy property but in some cases, the discount you get from the right to buy scheme may be enough to serve as your mortgage deposit. You will need to check this with your right to buy mortgage broker.

Can I borrow more on my right to buy mortgage?

Yes, the amount you can borrow further on your right to buy mortgage property will depend on your mortgage affordability as a mortgage applicant. Once you own the right to buy home there is no restriction by the right to buy scheme on borrowing more from your right to buy mortgage. You will have to notify your council first as they have pre-emption rights on your property for a limited time after the sale and if it appears you are borrowing for your benefit they will likely decline your request. The mortgage lender will also likely decline your request

Can I get a right to buy mortgage with bad credit?

Yes, you can get a right to buy mortgage with bad credit but bad credit further complicates the mortgage process and your right to buy mortgage broker will need to have specialist knowledge on dealing with bad credit mortgage applicants in order to be able to assist you in getting your right to buy mortgage at a good rate. You should look to build your credit) prior to applying for a right to buy mortgage.

Is there an age limit for right to buy?

No there is no age limit for the right to buy but there is a time restriction on how long joint applicants could have lived in the property. Your family members( who are not named on the tenancy agreement) who may be joint applicants on your right to buy application should have lived in the property for at least the immediate past 12 months before applying.

Who offers right to buy mortgages?

The right to buy mortgage is offered by the government and available through your local council who you rent the property from. The right to buy mortgage are available through most high street mortgage lenders.

Can I rent out my right to buy house?

Yes you can rent out your right to buy property once it is legally yours but you must let the council who you bought it from know. You must also notify the council’s Legal service team who may charge a one off sub-let fee

Is Right to Buy ending?

The Right to buy scheme is only available in England. The welsh Government has ceased the right to buy scheme from operating by 26 January 2019 . The scottish government has ceased operating the Right to Buy scheme. There is currently no fixed date on when the right to buy scheme will end in England.

Can I remortgage my right to buy property?

As Right to Buy offers property at a discount it is subject to a pre-emption period during immediately after the sale. This pre-emption period is usually for a few years. In this period the council takes a legal charge over the property to ensure that the the Right to Buy agreement is not abused

The council charge that is registered restricts the sale of the property for profit and also restricts the clients’ options to utilise their equity for personal gain – this includes capital raising and debt consolidation.

Within the pre-emption period the council must be approached to postpone its charge or give authorisation if a new regulated mortgage contract is sought. It might, however, be possible to get secured loans on the property without needing to speak to the council.

Is the right to buy scheme still available?

Yes, the right to buy scheme is still available but only in England. You should speak to your council or a right to buy mortgage broker to see if you are eligible.

What is the new right to buy scheme?

You might be referring to 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.

How long do you have to live in a council house before you can buy it?

You will need to have been a secured or flexible tenant for at least 3 years for you to be able to buy your council house. The tenancy does not have to be consecutive.

The future of Right to Buy

The Government announced in the Autumn Budget 2017 that there will be a voluntary right to buy pilot. More details will follow in the coming months. You can view the Housing associations which were involved in the pilot below.

Alternatives to the Right to buy scheme

There are other home buying schemes which may be eligible for aside from the Right to buy scheme.

They are:

• 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.

You may also be able to use a host of mortgages with the help of your family.

They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.

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.