Does this apply to me?

If you are a council tenant, or were you living in your home when the council transferred it to another landlord, then you may be eligible to purchase your home at a discount. 

If your home used to be owned by the council, but they sold it to another landlord (like a housing association) while you were living in it, you may have the Right to Buy. This is called ‘Preserved Right to Buy’.

If you think the above may relate to you and you are interested in buying your property , you should check with your Landlord as to whether you are indeed a “qualifying tenant”.

If you are unsure whether you are eligible then you should contact the Government’s official Right to Buy Agent service. The following website also contains useful information:-

https://righttobuy.gov.uk/am-i-eligible/

Please note there are different rules for homes in Wales, Scotland and Northern Ireland

The process is different to buying a property marketed via an estate agent, as there is no exchange of contracts and the matter once agreed will proceed straight to legal completion.  No deposit is paid.

Will I be better off buying my property?

Everyone’s situation is different but here are some possible advantages to exercising your Right to Buy

1. A home could be a valuable asset 
2. A home is an investment for the future
3. A greater ability to improve your home
4. Buying your home is one way to get a footing on the first step of the property ladder
5. Buying via your Right to Buy means you are buying a property you know relatively well.
6. The market value of the property is discounted .

Well those are the Pro’s what about the Con’s?

Buying your home is a big decision and a commitment that shouldn’t be taken lightly. The responsibilities, costs and financial commitments that ownership brings need to be thought about carefully, so you should always get impartial financial and legal advice before buying. It’s an exciting time, but there is a lot to think about. So you’ll need to take time to look at the costs.

You are responsible for how you finance buying your home – your landlord can’t arrange this for you. You should seek advice from an independent financial advisor.  

Think about the future, when your circumstances may change. Bear in mind that house prices and interest rates could go down in future as well as up.

Look at all the costs, not just mortgage repayments. You’ll have additional costs and responsibilities you may not have as a tenant, such as repairs and maintenance, buildings insurance, water rates, Council Tax and other utility services. You will also need to budget for general living costs food, bills etc).

If you buy a flat, you’ll probably be a leaseholder, and will have to contribute to the maintenance of the building and surrounding area. This is commonly known as a service charge and you should make enquiries of what sum this is likely to be so you can factor these costs into your budget. 

You will also be responsible for your own legal costs in purchasing your home and any Stamp Duty Land Tax payable on completion of your purchase. You can obtain an estimate of costs by requesting a quote. It is also recommended that you undertake a survey of the property. You will be responsible for the repair and maintenance of the property so it is best to make sure there are no expensive works required, or if there are, that you have budgeted for these works. 

Other things to consider…

• You are unlikely to be eligible for housing benefit if you become a homeowner.
• You may want income protection or life insurance in case anything happens to you while you’re paying back your loan or mortgage (some lenders require this). You should consult an independent financial advisor. 
• Your home could be at risk if you fail to keep up with your mortgage or loan payments.
• Even if you don’t need a mortgage yourself, check whether lenders are willing to give loans or mortgages on the type of house or flat you are buying. If you want to sell in the future, people interested in buying your property might need a mortgage.
• You will have to repay a percentage of the discount if you sell within a certain time of buying the property.
• When you buy the property, it is likely that you will be asked to enter into “restrictive covenants” these are binding conditions imposed on your title.  Such conditions may include restricting alterations and additions to the property amongst other things.

How much discount will I qualify for?

You will get a discount on the value of the property, but how much discount you will qualify for depends on a number of factors including how long you have been a tenant, where you live, and the type of property you live in. If you’re buying with someone else, you count the years of whoever’s been a public sector tenant the longest. You can make a joint application with someone who shares your tenancy, or up to 3 family members who’ve lived with you for the past 12 months (even if they don’t share your tenancy). 

Use the Right to Buy calculator to find out how much discount you could get.

There are different discount levels for houses and flats.

What do I need to do before I instruct my lawyer?

Applying

1. Service notice on your landlord the prescribed notice, as at February 2019 a Form RTB1 notice (your notice must be in the prescribed form and you can withdraw your notice at any time)
2. Your Landlord will reply to your notice with Form RTB2 and either admit or deny your application. They will reply within 4 weeks of receiving your application. (The landlord can only deny your application if do not have the right to buy)

Your landlord’s offer

If your application is admitted, your landlord will service notice on your specifying the purchase price (section 125 notice).  If the property is leasehold then your landlord will also give an estimate of the annual service charges and an estimate of any costs of repairs or improvements which may be incurred during the five years following the notice.  

Deciding to buy

You have 12 weeks after you receive your landlord’s offer to tell them you still want to buy. The landlord may send to you a reminder if you don’t reply to the offer. You have 28 days to reply to the reminder, or the landlord could drop your application. 

You can pull out of the sale and continue to rent at any time. 

If you disagree with the landlord’s offer

Contact your landlord and tell them why. If you think your landlord has set your home’s market value too high, you must write to them within 3 months of receiving the offer and ask them for an independent valuation. A district valuer from HM Revenue and Customs (HMRC) will then visit your home and decide how much it’s worth. You have 12 weeks to accept their valuation or pull out of the sale. There is an appeal process and an opportunity to apply for a reduction in the purchase price if there is undue delay to the process due to your landlord’s conduct.

I have accepted the offer,  what next?

A first notice to complete must not be served less than three months after the service of the section 125 notice. A landlord may serve a written notice on a tenant requiring him to complete the transaction within a certain period (this must be at least 56 days) or if any relevant matters are outstanding, to serve on the landlord within that period a written notice to that effect specifying the matters (first notice to complete).

You should make arrangements to secure mortgage funding. You also should instruct a conveyancing solicitor to act for you as soon as possible. Please obtain a quotation here. Your legal advisor will review the conveyance or lease for the property to ensure that you are purchasing a good and marketable title. 

If you fail to complete within the period set out in a first notice to complete then the landlord may serve a second notice to complete which will require you to complete within a further time period (again, of at least 56 days). If you do not comply with a second notice to complete then the notice claiming to exercise the right to buy shall be deemed to be withdrawn at the end of that period

Will I have to repay the discount?

The conveyance or lease of the property under the right to buy schedule must be on the terms provided by Schedule 6 of the Housing Act 1985. There will be an obligation to repay the right to buy discount and also anti-avoidance provisions. 

Repayment of the discount 

If you make a “relevant disposal” which is not an exempt disposal within the discount repayment period (currently five years) you are liable to repay on demand some or all of the discount for which you qualified. 

The amount of the discount that the tenant is liable to repay reduces by one-fifth for each complete year that has elapsed after the conveyance or grant. That is:

• 100% of discount to be repaid if the property is sold within one year.
• 80% of the discount to be repaid if the property is sold within two years.
• 60% of the discount to be repaid if the property is sold within three years.
• 40% of the discount to be repaid if the property is sold within four years.
• 20% of the discount to be repaid if the property is sold within five years.

Where the application to exercise the Right to Buy was made after 18 January 2005 then the maximum sum that the landlord may demand to be repaid following a subsequent relevant disposal will be based on the price or premium paid on the first relevant disposal.

A “relevant disposal” is a further conveyance of the freehold, an assignment of the lease, or the grant of a lease for a term of more than 21 years otherwise than at a rack rent. A relevant disposal also includes any other arrangement if:

• It is made in contemplation of the tenant exercising the Right to Buy.
• It is made before the end of the discount repayment period. 
• It is an arrangement by which a relevant disposal (other than an exempted disposal) is or may be required to be made to any person after the end of that period.

What if I sell after the five years?

The conveyances and leases must contain first refusal covenant that applies to owners wishing to dispose of a property bought under the right to buy scheme. This covenant requires that, during the first ten years after purchase, an owner must, before being permitted to dispose of the property (unless the disposal is exempt), first offer the property to their landlord, for purchase at full market value. During this time there must be no relevant disposal which is not an exempted disposal unless certain prescribed conditions have been satisfied. The “prescribed conditions” include:

• A recipient of an offer notice has eight weeks to either accept a first refusal offer, or to nominate another social landlord to accept the offer. The landlord must enter into a binding contract for the purchase of the property within 12 weeks of accepting the offer or within four weeks of receipt of a written notice from the owner saying that he is ready to complete the transaction, whichever is longer.
• If a recipient of an offer notice chooses not to accept an offer or to nominate another social landlord, then it must serve a rejection notice on the owner.
• If an offer is not accepted within the eight-week period then the owner is free to dispose of the property as he sees fit.
• If an owner, having served an offer notice, does not dispose of the property within 12 months, but subsequently wishes to dispose of the property, then a fresh offer notice must be served.

A right of first refusal covenant will be binding on the purchaser and future owners of the property.

There are lots of matters to consider before exercising your Right to Buy and you should take financial advice to ensure the decision you make is the right one.