Right to Buy 2024
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Right to Buy Mortgages
We talk about the Right to Buy scheme with James from J B Mortgages.
Is the Right to Buy scheme still available?
It certainly is, yes. The scheme was actually introduced by Margaret Thatcher in 1980 and so it’s been going for more than 40 years. At JB Mortgages we’ve helped many people buy a house using the scheme.
What does right to buy mean and how does it work?
It’s for people who currently rent a council property. After you’ve lived in the property for a certain period of time, you have the Right to Buy it from the council. It’s a really good scheme because, as an incentive, you get a discount off the purchase price of the house.
From a mortgage point of view, you can actually use that discount as your deposit. So for a lot of our clients you can get a mortgage for 100% percent of the discounted price.
Who is eligible for Right to Buy?
You should be eligible if you’ve been a tenant of the council house property for a few years. For exact confirmation, there’s a website with yes/no options for your circumstances. You can access it at Own Your Home to see if you’re eligible. You could also call your local council and they will usually go through it with you over the phone to give you an idea.
How do joint applications work?
Once the council has approved you for the Right to Buy scheme, they’ll give you some papers confirming that you’ve been accepted. When we apply for the mortgage, the application needs to be in the same names as those on the council papers.
The council usually puts the main person from the original tenancy agreement on the papers. But you can also add up to three family members if they’ve lived with you in the property for more than 12 months.
With a recent client, the papers named a mother and daughter aged 65 and 30. As the mother had retired, we managed to find a lender who just accepted the daughter’s income. They took the mortgage on a 35 year term
Circumstances like this are when a mortgage broker really comes into their own – we’ve got various solutions for whatever circumstances you might have.
How do I go about applying for Right to Buy?
First you need to be accepted by the council, so you go through the process with them. They’ll take all your details and make sure you’re eligible. They’ll also value your house. Once that process has been completed the council gives you the papers to confirm you’ve been accepted.
Those papers tell you the market value of the property and the discounted price. That’s when we get involved as mortgage brokers. We’ll obviously help you actually get the mortgage and buy the house.
Do I need a deposit for Right to Buy?
Because the council is giving you a discount off the market value of the property, lenders accept that discount as a deposit. So for most clients no deposit is needed – you can borrow 100% of the discounted price.
The caveat to that is your income and your financial situation need to support the monthly mortgage payment. If you didn’t quite reach that threshold, you might need to put a small deposit down to make up the difference.
Some people also have savings that they can use, so although you can borrow 100% of the purchase price, you don’t have to.
The final thing to be aware of is that if you are borrowing 100% of the discounted price, you will still need £2,000 to £3,000 for the fees to buy your house. There’ll be fees on the mortgage and legal fees so you need to make sure you’ve got enough to cover those.
What’s the discount if you live in a house or a flat?
The discount on houses and flats is up to £96,000 in England, and that increases to £127,900 in London. In terms of how it’s calculated, the council starts with a market valuation of your house.
You’ll get a 35% discount off that market value if you’ve been renting from the council for three to five years. That increases to 50% if you’ve lived in the house or flat for more than five years. You get an additional 1% discount for every year on a house, and 2% per year on a flat.
It’s quite complicated, so let the council work it out for you.
Can I let my Right to Buy property?
Right to Buy mortgages are usually only available on a residential basis, which means that you need to personally live in the property. If you want to buy your council house with a mortgage, you must have the intention to live there for the foreseeable future as your main residence.
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Everyone’s different. You might be self-employed. You might have some credit history issues – whatever your situation, we will find the most suitable product available to you from across the whole market.
Are there options if I’m refused by the council?
There are ways to appeal directly with the council. In some circumstances you might not agree with the valuation that the council’s given, so there’s also a process to appeal the valuation if you think it’s incorrect.
What does ‘Preserved Right to Buy’ mean?
Some people may have originally been tenants directly with the council, but the property was sold on to a housing association. In situations like this you could still have the Right to Buy under the terms of Preserved Right to Buy – but obviously you would be buying it from the housing association instead.
What does Right to Acquire mean?
Similar to Preserved Right to Buy, you might have been renting from another public sector landlord that’s not the local authority. Housing Associations, the armed forces and NHS Trusts and Foundation Trusts are common examples.
So if you are renting a property and one of these is your landlord, you still might have the right to buy your house under the Right to Acquire scheme.
Can the council refuse my Right to Buy application?
There are a few exceptions where the council can refuse you – for example, if your house is particularly suited to elderly people. Another example is if the council has already given you notice that the property is due to be demolished. They will advise you directly if this is the case, as part of the application process.
What happens if there are delays within the process?
The process does take a number of months to go through, but as a mortgage broker we’re very used to that and we’re here for clients throughout the process. If you need reassurance or help, we’re always on hand to give you assistance.
How can a mortgage broker help with Right to Buy?
Once you have been accepted by the council, my advice is to get in touch with us straight away. We’ll do everything we can to make sure that you can buy your property.
There are a lot of lenders offering specialist Right to Buy products. You can still be accepted at any age, if you’ve got bad credit or if you’re self-employed. It’s just a case of getting in touch so that we can explore your details and see what you’re eligible for.
There are lots of options out there for people with the Right to Buy scheme and we’ll do everything we can to help.
Your home may be repossessed if you do not keep up with your mortgage repayments.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
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