Right to Buy mortgages assist council tenants in purchasing their rented homes at a discount under the UK government’s Right to Buy scheme. These mortgages provide tailored financial support to help tenants transition to homeownership, taking into account the discounted purchase price. This makes homeownership more accessible to eligible tenants, enabling them to invest in their property and future.
- Here are the bullet points summarising the information about Right to Buy mortgages:
Right to Buy scheme
The Right to Buy scheme in the UK allows eligible council or housing association tenants to purchase their rented property at a discounted price.
You can apply to buy your council home if:
- It’s your only or main home
- It’s self-contained
- You’re a secure tenant
- You’ve had a public sector landlord (eg. A council, housing association or NHS trust) for 5 years – it doesn’t have to be 5 years in a row
Government incentive
Right to Buy mortgages are supported by the UK government to help tenants become homeowners.
Discounted price
You can get a discount on the market value of your home when you buy it if you qualify for Right to Buy.
As of April 2024, in addition to expert support, it’s important to note that the maximum discount caps have recently increased. Consequently, tenants can now potentially benefit from up to £102,400 off the value of their home outside London and £136,400 in the capital. Please check for the most recent updates beyond this date.
The discount is based on:
- How long you’ve been a tenant with a public sector landlord
- The type of property you’re buying – a flat or house
- The value of your home
If you’re buying with someone else, you count the years of whoever’s been a public sector tenant the longest.
You’ll usually have to repay some or all your discount if you sell your home within 5 years.
You might get a smaller discount if you’ve used Right to Buy in the past.
There are different discount levels for houses and flats.
(1) Houses
As of November 2023, the information regarding discounts for public sector tenants is as follows: You are eligible for a 35% discount if you’ve been a public sector tenant for 5 years. The discount increases by 1% for each additional year as a public sector tenant, with a maximum of 70% or £77,000 across England and £102,700 in London boroughs, whichever is lower. Please note that this information is subject to change, and it’s advisable to verify the latest details.
(2) Flats
You get a 50% discount if you’ve been a public sector tenant for 5 years. The discount goes up by 2% for every extra year you’ve been a public sector tenant, up to a maximum of 70% – or £77,000 across England and £102,700 in London boroughs (whichever is lower).
Your discount will be less if your landlord has spent money building or maintaining your home:
- in the last 10 years – if your landlord built or acquired your home before 2 April 2012
- in the last 15 years – if you’re buying your home through Preserved Right to Buy, or if your landlord acquired your home after 2 April 2012
Right to Acquire
Right to Acquire allows most housing association tenants to buy their home at a discount. You apply using the Right to Acquire application form.
You can apply to buy your housing association home if you’ve had a public sector landlord for 5 years. These landlords include:
- Housing associations
- Councils
- The armed services
- NHS trusts and foundation trusts
You can get a discount of between £9,000 and £16,000 on the price of your property.
The amount of discount you’ll get depends on where you live in the UK.
Your landlord will tell you what discount you’ll get when you apply to buy your home. You can also download a table of discounts, broken down by location.
Your discount might be reduced if you’ve used Right to Acquire or Right to Buy in the past
Eligible properties
Your property must either have been:
- Built or bought by a housing association after 31 March 1997 (and funded through a social housing grant provided by the Housing Corporation or local council)
- Transferred from a local council to a housing association after 31 March 1997
Your landlord must be registered with the Homes and Communities Agency
The home you want to buy must also be:
- A self-contained property
- Your only or main home
Mortgage availability
Right to Buy mortgages are specifically designed for tenants looking to exercise their right to buy their rented property.
Lower deposit requirement
Lenders offering Right to Buy mortgages may require a lower deposit compared to traditional mortgages, making it more accessible for tenants.
Financial assistance
Some lenders provide additional financial assistance, such as cashback or incentives, to support tenants in purchasing their rented property.
Mortgage affordability assessment
Tenants must undergo a mortgage affordability assessment to determine their ability to repay the loan, ensuring they can afford the mortgage payments.
Mortgage interest rates
Right to Buy mortgages may have competitive interest rates, offering tenants an attractive financing option for homeownership.
Repayment options
Tenants can choose between different repayment options, including fixed-rate or variable-rate mortgages, based on their preferences and financial circumstances.
Equity release
After a specific period, tenants may have the opportunity to release equity from their property, allowing them to access additional funds if needed.
Ownership responsibilities
Upon purchasing the property, tenants become responsible for its maintenance, repairs, and other homeownership responsibilities.
Resale restrictions
In some cases, there may be restrictions on reselling the property within a certain time frame after purchase to prevent immediate profiteering.
Who doesn’t qualify?
You can’t use Right to Acquire if:
- You’re being made bankrupt
- A court has ordered you to leave your home
- You’re a council tenant – you may be able to use Right to Buy instead
- You have ‘Preserved Right to Buy’
Professional advice
It is recommended to seek professional advice from mortgage advisors or independent financial advisors familiar with the Right to Buy scheme to understand the process and make informed decisions.