Since 1980, the government’s Right to Buy scheme has helped council tenants and some housing association tenants to buy their homes at a discounted rate. This reduction in price can be as much as £84,200 and £112,300 in London. Some Housing Association tenants have a right to acquire, although their discounts are not as substantial as those under Right to Buy; the maximum discount is £16,000.
Although the scheme was initially UK-wide, it is now only available in England, having ended in Wales and Scotland.
Whilst many Housing Association renters do not have a right to buy, if the property was council-owned and has been transferred to a housing association, or indeed any other landlord, secure council tenants may have retained their rights under the scheme. You must have been resident in the property at the time of the transfer, but it may also apply if you subsequently moved to another property owned by the same landlord.
Before starting a Right to Buy mortgages comparison, it is important to check whether you are eligible for the scheme. As we mentioned above, it is available to local authority secure tenants and assured tenants of other registered providers. Since 2015, the amount of time you must have been renting in the public sector has been reduced from five to three years.
You can also make a joint application to buy your home with someone with whom you share the tenancy, your civil partner or spouse, or up to three members of your family who have lived in the property for the past year. It must be their main residence, but they do not need to be named on the tenancy agreement. Once you have confirmed your eligibility, you can begin to think about comparing Right to Buy mortgages, and here at Bright Loans we can help you get started.
Depending on whether you live in a flat or a house the discounts available will vary.
– Flat dwellers will receive a 50% discount, provided that they have been renting for three to five years. The periods need not have been continuous. If you have been a tenant for over five years, this reduction will increase by 1% for each subsequent year to a maximum 70% of the purchase price, subject to the ceilings mentioned above.
– If you rent a house, the initial discount after three to five years is 35%, and for longer tenancies, the same rules apply with a 1% increase for each extra year up to a limit of 70%, and the same maximum figures.
You will need to notify your landlord of your interest in purchasing the property, and you do this by filling out an RTB1 form which you can find online. If your landlord is in agreement on a sale, they will tell you the price and how it was calculated, and what your discount is and how it was arrived at. They will also provide a full description of the property and what it comprises, details of any structural issues and an estimate of any service charges for the next five years.
From this point, you have 12 weeks to decide whether to proceed, and your landlord must remind you when the period is expired, after which you have four weeks to continue the process. You can, of course, withdraw at any point. If you are not happy with the valuation, you may request an independent valuation from HMRC.
If you are a council or housing association tenant, this may be the first time you have considered taking out a mortgage. As well as monthly repayments to your lender, remember that being a homeowner comes with added responsibilities. These include the costs of future maintenance and repairs on your property. As an owner, you will no longer be able to call upon a landlord to fix any defects in the property.
In working out what you can afford monthly for mortgage repayments, make sure you have made a comprehensive list of all your other fixed and occasional outgoings. If you are buying a flat, remember to get details of the service charges which you will have to add to your outgoings.
There are some additional fixed costs associated with buying a property, and you will have to pay these on completion of the deal. These include items such as your conveyancing costs and stamp duty. Make sure that you know exactly how much these extras will amount to. Finally remember that you may lose some benefits which you currently enjoy, such as housing benefit.
The good news is that most lenders will treat the discount on the purchase price of the property as the equivalent of a deposit. Although some may require a deposit, this will make your repayments cheaper. This is why it is important to compare what mortgages are available on the market and here at Bright Loans we can help you get the deal which best suits your circumstances.
First of all, you do not need a specific Right to Buy mortgage. We can help you check all the products which are suitable. Secondly, you will not be treated any differently to any other home buyer just because you are taking advantage of the Right to Buy scheme. Your lender will just need to be happy that you can meet the repayments, although there may be some properties they are reluctant to lend against.
Is it only through my bank that I can compare Right to Buy mortgages?
No, you can take advantage of all the products on the market, and at Bright Loans we will help you find the best deal. Our advice is free and we are regulated by the Financial Conduct Authority so you can be confident that we show only products from reputable, regulated lenders.
So, why not get started and let us help you make that home ownership dream become a reality.