Right to Buy your Council House

Right to buy your Council House.

Using the right to buy scheme is an excellent route to owning your own home , especially if you have lived in the property for many years and paid rent to your local council or housing association.

Recently, the government reformed the right to buy process, and the gov.co.uk website provides more details about the process, including the maximum discount you can receive.

This is a link to the government advice: https://www.gov.uk/right-to-buy-buying-your-council-home/applying

Purchasing a property, especially after renting for many years is a big decision to make. It must  be considered carefully, as it comes with extra financial responsibility. For instance, if you arrange a mortgage to help you to buy the property and then you can’t keep up with the repayments, it could mean that your home may be repossessed.

However, more positively buying your home may give you more freedom and control over your property and be an asset to leave for your loved ones.

First steps
To begin the process, you apply to your local council or housing association and the next step is for them to send you an offer with the price they believe you should pay along with their calculation as to how they worked it out.  The calculation is based on type of property and how long you have resided there. There is also a maximum discount level based upon where you live.

Until the present Labour Government changed the Right to Buy scheme rules in 2024, the discount used to be higher.  In the North East now, the maximum discount that can be given is £22,000 which is significantly lower than that previously set, which was £102,400.

Discounts
You can get a discount on the market value of your home when you buy it if you qualify for Right to Buy, and where the public sector landlord has not spent more money on the property than it is worth and based on the type of property you’re buying:

  • a flat or a house
  • the value of your home
  • where you live
  • how long you’ve been a tenant with a public sector landlord

You might get a smaller discount if you’ve used Right to Buy in the past.

Working out the discount
There are different discount levels for houses and flats. If you’re buying with someone else, you count the years of whoever’s been a public sector tenant the longest.

Houses
You get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up 1% for every extra year you’ve been a public sector tenant up to the maximum discount amount.

Flats
You get a 50% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up 2% for every extra year you’ve been a public sector tenant, up to the maximum discount amount.

Maximum discount
The maximum discount you can get is whichever is lower:

  • 70% of the value of your property
  • the maximum discount for your region
Region Maximum discount Exceptions
North East £22,000 Not applicable

 

If you disagree with the calculated purchase price, you can write to your landlord within three weeks of receiving your offer and ask them to obtain an independent valuation.

Once you are happy to proceed with the offered price, you are then ready to instruct a solicitor.

Instructing a solicitor
Our staff at Hannays would be happy to provide further advice and a quotation for the legal work involved  please click here for more information or call 0191 4974630 and choose Option1.

Once we are instructed,  we will send you some information and documents that is important to read carefully. You will need to complete the documents, sign, and return them to us.

We will then ask you to complete an identification check, source of funds and source of wealth checks. You may be able to complete these ID and financial checks face to face or by completing the checks on a mobile device using the Thirdfort app –  https://www.hannayslaw.co.uk/thirdfort-online-identity-check/

Your solicitor has by law, a duty to establish the source of funds for your property purchase, and how you acquired the funds. This usually involves sending bank statements to your solicitor and identifying the origin of the funds. If you are receiving a ‘gift’ from a third party e.g. family member these checks would then also be undertaken on that person. We would advise any third party receive independent legal advice prior to agreeing to gift this money. Your solicitor will provide more information on this during the transaction.

Your next step is to advise your local council/housing association that you have chosen Hannays to represent you, so they can send some paperwork to us. Our solicitor will read through these documents and raise any questions with them, and this is called ‘raising enquiries’.

If you are funding the purchase with a mortgage, your lender may carry out a survey to make sure the property is worth the amount they are loaning to you, but you may wish to appoint your own surveyor  to inspect the property and you should take into consideration any advice they may have.  If the surveyor highlights any defects or repairs that need to be done, it would be sensible to  resolve them with your Landlord, as once you own the property, these repairs would be your responsibility and cost.

If you are funding the purchase with a mortgage, you will need searches to be ordered, as mortgage lenders have made them a mandatory condition of making the loan, but cash buyers find them useful too. Searches provide more information about a property and alert you to any problems that could arise in the future.  If you are a cash buyer, you may feel that you know your property and don’t feel the need to purchase searches, but you can always discuss whether you should order them or not with us to help you to decide.

Once everything is ready legally, a completion date will be set and afterwards you will become the owner of your own home.

One of the important points to note when using the right to buy scheme is that there are  implications should you decide to sell your property after purchasing it.

Should you decide to sell the property at any time within the first 10 years from the date of purchase, you will be required to offer the property to your council or housing association who sold you the property to buy at the current market value first – this is known as the Right of First Refusal.

If your former landlord does not wish to purchase the property, and 8 weeks has passed since offering it to them, you will then be free to sell it on the open market.

If you sell it within five years you are obliged to pay back a discount, which is as follows:

  • If sold within a year, 100% is repayable.
  • If sold within 2 years, 80% is repayable
  • If sold within 3 years, 60% is repayable
  • If sold within 4 years, 40% is repayable
  • If sold within 5 years, 20% is repayable
  • No repayment is required after 5 complete years

If you do decide you would like to begin the process of buying your home from your public sector landlord, our team at Hannay’s would be delighted to explain the procedure help you and provide support.

If you would like more information, please email info@hannayslaw.co.uk give us a call for a quote 0191 4974630 Option 1 or complete the online enquiry form.