Home Buying Guide: Article Two – ‘The ins and outs of your Right to Buy’

Are you aware of the Right to Buy? If you are either a tenant of a housing association or local authority you may have the right to buy your home at a discount due to the period you have been living there as a tenant.

The Right to Buy is literally what the text states: the right to buy your home. It allows a discount on the price of purchase of your home according to the length you have lived there. The Council, in turn, can use the money gained towards 30% of the price of further homes.  Where they do not use the funds they have to be passed, with interest, back to the Government.

Purchasing the home, you already call ‘home’ is surely an appealing prospect. Knowing what you have made yours as being legally yours is a satisfying achievement. So, if you are in a position to consider this, we want to make sure you are aware of some of the ins and outs before going ahead.

Who is eligible for Right to Buy purchases?

You are eligible to buy the home you are living in under the Right to Buy scheme if you:

• are a secure tenant
• have been a public sector tenant for a minimum of three years
• are in a home which is self -contained and is your mai or only home
• are in a home which is not considered suitable for the elderly (detailed information is available on this at on the following link.
• are not subject to any pending or current bankruptcy order
• are not under an arrangement with creditors you still owe money to
• are not subject to a moratorium period within a debt relief order
• are not subject to a suspension order relating to anti-social behaviour in respect of your home

There is also a scheme operating in a similar fashion to the Right to Buy scheme known as the Preserved Right to Buy.  This applies to a person who, whilst renting as a secure tenant of the local authority, underwent a change of landlord to a registered provider, such as a housing association.  If such a person later moved to a different property owned by the new landlord they would still be eligible to apply.

*A public sector tenant is a person who rents their home from a public body or a ‘Right to Buy landlord'.

How to purchase a Right to Buy Property

As the Right to Buy is a purchase of property the usual processes associated with buying a property will apply such as, for example, the likelihood of applying for a mortgage and the conveyancing process. It is recommended, therefore, that you seek legal and/or other professional advice regarding this. In addition to all the standard procedures carried out in order to purchase a property there are specific steps which need to be taken to get your Right to Buy purchase started.

• Firstly, you must complete a Right to Buy claim form (RTB1) and pass this to your landlord. The form can be found here.
• You should then receive an RBT2 form back from your landlord within four weeks from sending your RTB1 (eight weeks where you have been a tenant for less than three years). The form will detail whether the Right to Buy does exist for you and if not, why not. If you receive the latter response in the form you can query this through the Citizens Advice Bureau or legal channels, and finally through the Ministry of Housing, Communities and Local Government.
• If you do have the Right to Buy, your landlord will within eight weeks (where your home is a freehold) or 12 weeks (where your home is a flat or leasehold) send you a Section 125 Notice. This will contain a description of your home, the price it is being offered at, any repairs which may need to be carried out including any structural defects in existence and the terms and conditions related to the sale. If you have any queries regarding this you should direct these to your landlord but if you disagree with the price you are able to contact the District Valuer for a price. The price from the District Valuer will be the one of relevance. You should, therefore, note that the latter applies even if the District Valuer values your home higher than your landlord’s quote.

Some important details

The discount rules - 

The attractiveness of the Right to Buy scheme is not just the prospect of owning the home you already live in but the discount which applies to the cost of purchase. The discount increases the longer you have lived in your home, where the maximum discount entitlement is £82.800 and £110,500 for London homes. The discount increases each year in April.

For those whose home is a house and have spent three years as a public sector tenant, they are eligible for a 35% discount off the purchase price.  This increases after five years of tenancy by 1% each year. , For those who live in a flat, the discount after three years is 50% and rises after five years by 2% each year.  The maximum discount possible is 70%.  The tenancy does not have to span one home but could be several public sector tenancies due to a change of homes.

You will become an owner rather than a tenant -

Whilst it may be obvious that there are differences between renting your home and owning it, those differences could affect your budget considerably so need to be considered when deciding to take advantage of the Right to Buy. For example, you will need to set aside a budget to:

• carry out any repairs on your home which may arise from time to time
• pay for service charges
• pay for buildings insurance in addition to contents insurance
• potentially pay for life and income protection insurance to protect you and your family in relation to any mortgage taken out

Wise tips

Here are some tips you might not otherwise have been aware of:

• If your landlord delays the sale you may be able to receive a further discount
• Your application can be withdrawn if you do not agree on the purchase within a certain time. However, you will receive a warning letter prior to this.
• Where you are in a joint tenancy, regardless of whether or not you personally are occupying the home as your main or only home, you still have the joint right to buy. However, if you have made an agreement with the other tenants that one or more of you have more right than the others this is only valid if the person who enjoys that rights is residing in the home as their main or only home.
• Where you have members of your family who are not listed as joint tenants and wish to share the Right to Buy with you, you may stipulate this when making your application for your Right to Buy. The member must be your spouse or must have been residing with you 12 months prior to your application unless the landlord consents otherwise.
• If your home has been deemed as suitable for the elderly and hence you do not have the Right to Buy, your home must have been considered in aggregate as suitable rather than a focus on a particular feature.

Summary

Buying a property is likely to be the most expensive purchase an individual makes within her lifetime and the discount offered through the Right to Buy scheme could provide the only opportunity to lower-income individuals to make such a purchase. Detailed information on the scheme can be found here.

Our team at Online Conveyancing Solicitors can assist in dealing with your Right to Buy conveyancing. Contact our team either today for a no-obligation quote.