Right To Buy
As an Independent financial and mortgage advisor we will scan the whole of the market to find the best lenders willing to offer a mortgage for people with the Right to Buy their council home. You can take advantage of:
Often no deposit is required because of the discount given by the local authority,
You may be able to borrow MORE than the Right to Buy purchase price of the property for home improvements, debt consolidation, and more,
We can help if you already have your Right to Buy papers from the council or if you don't know how to get them we can guide you through the process.
Please find below a generic overview of Right to Buy. If you are interested in buying your home please note for mortgages we can be paid by commission or fee. If paying by a fee this is typically 0.5% of the loan. We will not charge you any up front charges.
The overall cost for comparison is 6.7% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
You may have the Right to Buy if you are a secure tenant and the property is your only home. The qualifying period is 2 years for tenancies that started before 18 January 2005, and 5 years for those that started after that date.
The Right to Buy scheme gives tenants a discount on the market value of their homes. The amount of discount depends on the length of time you have been a tenant (with your present and previous Right to Buy landlords). The maximum discount for properties in the North East is £22,000. This limit is fixed by law.
You may also be able to claim discount when your husband or wife was a public sector tenant or lived in housing provided by the armed forces or if you lived with your parents after the age of 16 and later became the tenant of the same property.
Discount is calculated differently for houses and flats:
Houses: The minimum discount is 32% if your tenancy is at least 2 years and increases by 1% for each additional year to a maximum of 60%.
Flats: The minimum discount is 44% if your tenancy is at least 2 years and increases by 2% for each additional year to a maximum of 70%
Your discount cannot be greater than the maximum discount of £22,000.
Your discount may be reduced by a special rule called the cost floor, which applies if your home has recently been purchased or built by your landlord or money has been spent on repairing or maintaining it. It means the price you pay cannot be less than what has been spent. If in the last 10-11 years this amounts to more than the market value of your home then you will not receive any discount.
Repayment of discount – You can sell your home whenever you like, however you may have to repay some or all of the discount depending on when you originally applied to buy your home and how many years you owned it before it was sold. If you applied after the 18th February 2005 and you sell within the first 5 years of buying, the following discounts will need to be repaid:
- Within 1st year - 100% of discount
- Within 2nd year - 80% of discount
- Within 3rd year - 60% of discount
- Within 4th year - 40% of discount
- Within 5th year - 20% of discount
In addition, the amount of discount to be repaid if you sell within 5 years of purchasing will be a percentage of the resale value of the property disregarding the value of any improvements, for example:
Your home was valued at £100,000 at the time you bought if from the Council. You received a discount of £20,000, meaning that your discount was 20%.
You want to sell your home in the second year of purchase. Your home is now valued at £150,000. You would have to repay £150,000 x 20% discount x 80% i.e. £24,000
During the 6th year and onwards you can sell the property without having to repay any of the discount
Right to first refusal - If you applied to buy your home on or after 18th January 2005 and you wish to sell within the first 10 years, you will be required to offer it to either your former landlord or to another social landlord in your area at full market value. Full details are set out in the Government booklet - ‘Your Right to Buy your home’.
Your home may be repossessed if you do not keep up repayments on your mortgage.
