If you are renting accommodation that’s owned by the council and dream of owning your home, you may be entitled to buy it using the Right to Buy scheme. Under this scheme, you can benefit from a significant discount on the property price to help you get a foot on the property ladder.

At Trinity Finance, we can check your eligibility for the scheme and advise you on the application process. Our mortgage brokers can then search for a competitive mortgage deal for you to finance the rest of your purchase. This includes deals aimed specifically at borrowers using the Right to Buy scheme and those where lenders are happy to accept the discount in place of a deposit.

How does the scheme work?

Right to Buy is a scheme that enables most council tenants and some housing association tenants to buy their council property at a discounted rate. The scheme operates in England and Northern Ireland, although different rules apply for the latter. It no longer runs in Scotland or Wales.

Eligibility criteria

If you wish to buy your home via this scheme, you need to meet the following criteria to apply:

• You’re a secure tenant
• The property is self-contained
• The property is your main or only home
• You’ve had a public sector landlord, such as a council, housing association or NHS trust, for at least 3 years. These do not need to be consecutive years.

Under this scheme, you can make a joint application with someone that you share your tenancy with. You can also apply with up to three family members as long as they have lived with you for the past 12 months. They don’t need to have shared the tenancy with you.

What if your home used to be council-owned?

If you were living in your home as a secure council tenant and it was sold to another landlord, such as a housing association, you may have a Preserved Right to Buy. Your landlord will be able to confirm this with you.

What discount can you benefit from?

The maximum discount available with Right to Buy is £87,200 with the exception of London, which is £116,200. This value is reviewed each year and increased according to the consumer price index (CPI). Various factors affect the amount you’re offered as a discount:

• Whether you’re buying a house or a flat
• The value of the property
• How long you’ve been renting from a public sector landlord

For the last point, when you’re buying the property with another person, the years of the person who’s been a public sector tenant for the longest period are taken into account.

Discounts for houses

As a public sector tenant for 3 to 5 years, you’re entitled to a 35% discount on the property’s market value up to the maximum discount mentioned above. After 5 years, this discount increases by 1% for each additional year that you’ve been a public sector tenant. This applies to whichever is the lowest out of a maximum discount of 70% or the value of £87,200 (£116,200 in London).

Discounts for flats

As a public sector tenant for 3 to 5 years, you can benefit from a 50% discount on the flat’s market value up to the maximum amount we’ve previously mentioned. After 5 years, the discount increases by 2% for each additional year that you’ve been a public sector tenant. Just like the discounts given for houses, this discount for flats applies to whichever is the lowest out of a maximum discount of 70% or the value of £87,200 (£116,200 in London).

Exceptions to the discount calculations

If your landlord has spent funds building your home or maintaining it, the discount that you’re offered may be reduced. Should the funds spent by your landlord exceed the market value of your home, you won’t be entitled to any discount. Also, if you’ve previously purchased a property using the Right to Buy scheme, the discount you received then will more than likely be deducted from any new discount you may be entitled to.

How to apply

You can apply for this scheme using the online RTB1 application form, which you need to save, print out and send to your landlord. Your landlord needs to reply to you within 4 weeks to confirm or reject your Right to Buy the property. If you’ve been renting from your landlord for less than 3 years, they have 8 weeks to reply to you. Your landlord needs to provide you with a reason if they decline your application. If the reason given is that the property is suitable for accommodating elderly people, you can appeal to a tribunal.

What happens next?

If your landlord agrees to your Right to Buy, they need to send you an offer using a Section 125 Notice. This must be within 8 weeks for a freehold property or 12 weeks for a leasehold property. The detailed offer will include:

• The price your landlord wishes you to pay and how this was calculated
• The discount you’re entitled to and how this was calculated
• A description of the property as well as any land that’s included in the price
• A description of any known structural defects
• Estimates of the service charges that will be due in the first 5 years if you’re buying a leasehold property

Responding to your landlord’s offer

Once you’ve received the offer, you need to advise your landlord of your decision to buy in writing within 12 weeks. If your landlord doesn’t hear from you within this time frame, they will send you a reminder. At this point, you will have 28 days to reply — if you don’t, your landlord will assume that you no longer wish to buy the property and your application won’t proceed any further. If you decide not to proceed with the purchase, you can simply continue renting the property as normal.

What happens if you don’t agree with the offer?

When you receive the offer, you may think that the price your landlord is asking for is too high. If this is the case, you need to notify your landlord in writing within 3 months and request an independent valuation. This will be carried out by a district valuer who will inspect your home to assess the property’s value. You will then have 12 weeks to either accept the valuation or withdraw from the sale.

What happens if your landlord causes a delay?

Just as you have to adhere to a set time frame, so does your landlord. If they don’t respond within the appropriate time, you may be eligible for a reduction in the property price. You will need to complete an ‘initial notice of delay’ form and send it to them. Your landlord will then have 1 month to proceed with the sale or issue you with a counter notice. The latter will either state that they have already responded or provide an explanation as to why the sale can’t proceed any faster.

If you don’t receive a response from your landlord within this time, you can complete an ‘operative notice of delay’ form. Any rent you pay during the delayed period may be deducted from the purchase price and this may be repeated if your landlord causes further delays.

Applying for your mortgage

You’ll need to arrange the finance for buying your home and this is likely to be a mortgage. Our mortgage brokers can check your affordability and discuss your mortgage preferences with you. With unrestricted access to the market, our brokers can search for the best mortgage deal to suit your needs and circumstances.

As mentioned earlier, some lenders offer deals that are aimed specifically at those using the Right to Buy scheme and our brokers will provide you with details of these deals. Normally, you have to pay a deposit when applying for a mortgage but some lenders will accept your Right to Buy discount in place of one. If you haven’t been able to save a deposit, our mortgage experts can approach these lenders on your behalf.

To begin your mortgage application process, give us a call on 01322 907 000 or send us an email at info@trinityfinance.co.uk. You will be provided with a dedicated mortgage broker who will look after you throughout the entire process, making it as straightforward and stress-free as possible for you. If you prefer, send an enquiry via our contact form and one of our mortgage experts will get back to you as quickly as possible.

Other costs to consider

Before you proceed with buying your home, you need to include various costs in your calculations. Your mortgage costs, for example, may include a mortgage arrangement fee and a valuation fee. Some lenders offer incentives with these for first-time buyers so our mortgage brokers will check this first. The other costs you need to budget for may include:

• Your solicitor’s fees
• A survey fee
• Stamp duty
• Buildings and contents insurance

You may also wish to take out income protection to ensure that your mortgage payments will be made should you be unable to work in the future. Life insurance is also a consideration as this will provide security that your mortgage will be repaid in the event of your death. This gives you peace of mind that the financial burden won’t be passed on to your loved ones.

As a homeowner, as well as budgeting for your monthly mortgage repayments, you’ll need to bear in mind that you’ll be responsible for any repair and maintenance costs. If you’re currently receiving housing benefits, you won’t be entitled to them once you own the property.

What happens when you sell your home?

You can sell your home whenever you wish but there are some conditions you need to adhere to. If you choose to sell within 10 years of buying your home through the scheme, you must offer it to your previous landlord or another social landlord within the area. If the landlord agrees to buy it, this should be for the full market price as agreed between you. If you and the landlord cannot agree on the price, a valuation will be carried out by a district valuer and this will determine the price. If the landlord doesn’t confirm their intent to buy the property within 8 weeks, you can sell it on the open market.

Repayment of your discount

The other stipulation is that you must repay some or all of the discount you received if you decide to sell the property within 5 years. If you sell it within the first year of owning it, you have to repay the entire discount. If you sell it within the second year, you have to repay 80% of the discount. In the third year, this is reduced to 60% of the discount, the fourth year is 40% of the discount and the fifth year is 20% of the discount. It’s important to note that this is based on the market value at the time you sell the property. This means that if your property’s value has increased since you bought it, the amount you have to repay will be affected.

You may prefer to transfer ownership of your home to a family member. If so, you need to agree this with the landlord and then instruct your solicitor to proceed with the arrangement. In this instance, you may not have to repay any of the discount you received.

Get expert advice on buying your home through the Right to Buy scheme

Our mortgage brokers are here to provide you with impartial advice on the Right to Buy scheme to help you decide if it’s right for you. They can check your affordability for a mortgage and search for the most competitive mortgage deals to suit your needs. This includes those where lenders will accept your Right to Buy discount as a deposit.

At Trinity Finance, we can also help you with other aspects of the home-buying process. This includes recommending a solicitor if you don’t have one, arranging your buildings and contents insurance and putting mortgage protection in place. Whatever your needs, just give us a call on 01322 907 000 for a professional and tailored service. If it’s out of office hours, simply send us an email at info@trinityfinance.co.uk or an enquiry via our contact form and we’ll reply to you as quickly as possible.