Right to Buy is a scheme in England which allows most Council home tenants (and tenants of some housing associations or other public sector landlords) to buy their home at a discount.
Margaret Thatcher originally introduced the scheme in the Housing Act of 1980, intending to reduce the amount of social housing in the UK and increase home ownership.
If you meet the conditions of your landlord, you could receive a discount of up to £87,200.00 (or £116,200 in London) on the purchase price.*
To benefit from the Right to Buy your home, you must be a secure tenant of the property, which must be self-contained (i.e. a whole property rather than a room in a house), and you must have lived in the property for at least three years. **
It is important to consider the responsibilities and costs of home ownership and seek independent financial advice.
If you decide to proceed with your Right to Buy, firstly, you will need to provide the application form to the landlord, which is an RTB1 form. Your landlord must give you a response within four weeks. If they agree to proceed, from then on, your conveyancer will liaise with your landlord’s legal advisors, whether this is a law firm or an in-house legal department, on your behalf. The process is similar to a “normal” house purchase (on the open market), which is outside this article’s scope.
The main difference between a Right to Buy transaction to a “normal” purchase is that once you have completed the purchase of your home, a restriction will be registered on the Title of the Property which prevents you from selling the Property unless certain conditions have been met:
The first condition is that if you sell your home within the first ten years of your ownership, you must first offer the Property back to the Landlord (known as a Right of First Refusal). They will be able to purchase the Property back from you, or if they do not wish to, you can then sell the Property on the open market. Offering your property back to the landlord is usually straightforward, as most landlords will have a standard form. Once ten years have passed, you can sell your home without first offering it back to your landlord.
The second condition is that if you sell the Property within the first five years, in addition to the Right of First Refusal, you are also required to pay back some (or all) of the discount you received on the purchase price. The amount will depend on how many years have passed since you purchased your home. If you were to sell your home within the first year, the discount would be repayable. This decreases by one-fifth each year. After five full years have passed, none of the discounts will be repayable if you sell your home.
If you are considering the Right to Buy scheme, you can check your eligibility with your landlord directly and use the Government’s online discount calculator.***
If you have any queries regarding the Right to Buy or require a conveyancer to act for you in purchasing your home, do not hesitate to contact us.
*From 6 April 2022, this is the maximum discount available; however, this figure increases annually by a percentage equal to the percentage change in the consumer price index, rounded down to the nearest £100.
**Requirements of the Landlord may vary, and you should check your eligibility with your landlord directly.