Right to Acquire

What is Right to Acquire?

Right to Acquire allows you to apply to buy your home from the housing association that you rent it from. This is provided that you’ve spent at least 3 years as a public sector tenant. Public sector landlords include housing associations, councils, the armed services, NHS trusts and foundation trusts. You can buy your property with a discount of between £9,000 and £16,000 on the price. The property you live in must be self-contained and your only or main residence. You should be aware that the property you’re living in may not be available to buy. However, if this is the case, your landlord may be able to offer you an alternative property.

How does Right to Acquire work?

You can apply for the scheme on your own or with other applicants. If making a joint application, this must either be with someone who is sharing your tenancy or with up to three members of your family who have lived with you for the past 12 months. Your family members don’t need to have shared your tenancy.

To help you afford the purchase, you will receive a discount on the price. You then need to arrange a mortgage to finance the outstanding amount. You also need to bear in mind that when you own the property, you will be responsible for any repairs and ongoing maintenance costs.

What discount can you expect?

The amount you’ll receive for your Right to Acquire discount will depend on whereabouts in the UK you live. But, as mentioned above, it will range from £9,000 to £16,000. When you apply for the scheme, your landlord will confirm the discount that you’ll receive. If you’ve previously used Right to Acquire or Right to Buy, the discounted amount may be lower than the standard amount given for your location. The discount will also be limited to 50% of the property’s value. So, for example, if you’d normally be entitled to a discount of £9,000 for your region but the property is valued at £15,000, the maximum discount you’ll receive will be £7,500.

Eligibility criteria for Right to Acquire

To qualify for this scheme, eligibility criteria must be fulfilled by you, your landlord and the property.

Your landlord’s eligibility

Your landlord has to be registered with the Regulator of Social Housing.

The property requirements

The property must be self-contained, which means there are no shared facilities, such as a kitchen or bathroom. It must be your only home or your main residence. It must either have been:

• Built or purchased by a housing association after 31^st March 1997. The funding for this must have been via a social housing grant given by the Housing Corporation or the local council.
• Transferred to a housing association from a local council after 31^st March 1997

Your Right to Acquire eligibility

You need to have had a public sector landlord for at least 3 years to qualify. Not all housing association tenants are eligible for this scheme. If this is the case, you may be eligible for Right to Buy or the Preserved Right to Buy scheme. Our mortgage brokers will check your eligibility first so that you know what your options are.

When do you not qualify for the scheme?

You won’t be eligible to apply for the scheme if:

• You are bankrupt or have a pending bankruptcy petition
• A court has served you with a possession order
• You are subject to a formal agreement with creditors
• You have a Preserved Right to Buy
• You’re a council tenant. In this case, you may be eligible for the Right to Buy scheme.

How to apply to Right to Acquire

When you’re ready to apply to buy your home, fill in the Right to Acquire application form (RTA1). Once that’s done, send it to your landlord. Your landlord has 4 weeks within which to reply to you with a decision after receiving your application. If you’ve been their tenant for less than 3 years, they have up to 8 weeks to reply to you.

What happens next?

If they don’t agree to sell the property, they need to provide you with a reason. Unfortunately, it’s not possible to appeal against their decision. Your landlord may offer you another property to buy instead, although they’re not obliged to do so. You don’t have to agree to this if you don’t wish to buy it.

If your landlord agrees to sell the property, you’ll receive an offer. This must be within 8 weeks of confirming that you can buy the property if it’s freehold. If the property is leasehold, they must send you an offer within 12 weeks. Your offer will include:

• The price they wish to sell the property for and how they arrived at this figure
• The discount you’ll receive and how this amount was determined
• A property description and details of any land that’s included in the price
• Any known issues with the structure of the property, such as subsidence
• Service charge estimates for the first 5 years if the property is a flat or maisonette

If you agree with the landlord’s offer

You have 12 weeks after receiving your landlord’s offer to confirm that you still wish to buy the property. If you don’t reply, you’ll receive a reminder – an RTA4 – from your landlord. This will give you at least 28 days to reply. A final reminder – an RTA5 – will then be sent to you if your landlord hasn’t heard from you. If your landlord still doesn’t receive a reply from you after that, they can withdraw the application. You have the right to withdraw from buying the property at any time if you wish to continue renting.

If you disagree with the offer

Should you disagree with your landlord’s offer, you need to get in touch with them and let them know why. If you feel the price is too high, you need to notify your landlord within 3 months of receiving your offer. You need to stipulate that an independent valuation is carried out. This will be done by a district valuer from HM Revenue & Customs. A revised offer notice will be sent to you by your landlord based on the new valuation. You then have 12 weeks to either confirm in writing that you wish to proceed or to withdraw your application.

Arrange your mortgage

Now that the purchase has been agreed, you need to arrange the finance to buy your home. Unless you have adequate savings, you’re likely to need a mortgage. Our mortgage brokers can discuss your circumstances and check your affordability before searching for the best options available. They know which lenders are approved for Right to Acquire purposes and will find the optimum mortgage deal to suit your needs.

Just give us a call on 01322 907 000 to start the mortgage application process. Your dedicated mortgage broker will oversee your application from start to finish to ensure that it runs smoothly. If you prefer, send an email to us at info@trinityfinance.co.uk or an enquiry via our contact form. One of our expert mortgage brokers will reply to you with more information as quickly as possible.

When do you have to complete the purchase?

Your landlord will be notified when you’ve received a mortgage offer. They’ll instruct their solicitors at that point to proceed with the transaction. Your solicitor or licensed conveyancer will handle the legalities of your purchase, which you’ll need to complete within 3 months of receiving the offer notice.

If you don’t complete within that time frame, you may receive a first notice from your landlord. If so, you’ll have at least 56 days to complete. A second notice may be served by your landlord giving you another period of at least 56 days if you still haven’t completed in that time. If you don’t complete within this second notice period, it will be assumed that you no longer wish to purchase the property and have withdrawn your application.

The costs involved when buying your property

As well as being able to afford your mortgage repayments, there are other costs to consider, both in the short term and the long term.

Initial costs

When you proceed with your purchase, there are initial costs that you need to budget for. These can include:

• A survey fee. If you decide to have a survey carried out, you’ll need to cover the cost of this.
• Legal costs. You need to pay the fees charged by your legal representative.
• Stamp duty. You may be liable to pay stamp duty if your property is over a certain price.
• Land Registry fee. This fee is payable when you register as the new owner of the property.

Ongoing costs

• Mortgage repayments. If you’re financing your purchase with a mortgage, you need to ensure that you can cover your monthly mortgage repayments. If you don’t keep up with your repayments, you risk losing your home.
• When you own your home, you’ll need to ensure that you have financial protection in place in case of unexpected incidents. This means you’ll need to take out home insurance, which includes buildings and contents insurance. Your mortgage lender will more than likely insist that you have arranged buildings insurance before the exchange of contracts. You may want to consider mortgage payment protection insurance too.
• Repairs and maintenance. As the property owner, you’ll be responsible for the costs of any repairs and maintenance work needed. Some of these may be very costly, such as electrical issues or having to replace the boiler.
• Service charges. If you’re buying a leasehold property, you’ll need to pay service charges. These are your contribution towards maintenance and repairs to the communal areas as well as major building works, such as replacing the existing roof. Your offer notice will detail the estimated service charges for the first 5 years.
• Other costs. You also need to cover the utility bills, council tax and charges for water and sewage.

What happens when you sell your home?

You can sell your property at any time. However, if you wish to sell the property within 10 years of owning it, you must offer it to your previous landlord first. This must be at the current market value as agreed between you both. This is known as the First Right of Refusal. If you can’t agree on the price, the district valuer will carry out a valuation to determine the price. You won’t be charged for the valuation. If your former landlord doesn’t confirm that they want to buy it within 8 weeks, you can put it for sale on the open market.

Repaying your discount

If you decide to sell your home within 5 years of the purchase date, you will have to repay some or all of the discount. If you sell the property within the first year, all of the discount has to be repaid. In addition to this, the amount you repay is determined by your home’s value when you sell it. This means that if you originally received a 10% discount, you’ll need to pay back 10% of the sales price. After the first year, the amount that has to be paid back reduces, as detailed below:

• 80% of the discount is repayable if you sell within 2 years.
• 60% of the discount has to be repaid if you sell within 3 years.
• 40% of the discount is repayable if you sell within 4 years.
• 20% of the discount has to be repaid if you sell within 5 years.
• If you decide to sell after 5 years, you don’t need to repay any of the discount.

For example, your property may have been valued at £150,000 when you bought it and you were given a £15,000 discount, equating to 10% of its value. When you decide to sell it, your property may be valued at £200,000. The discount repayment amount is calculated as 10% of £200,000, which is £20,000. If you’re selling the property within 4 years of buying it, the amount to be repaid will be £20,000 x 40%. Therefore, you’d need to repay £8,000.

Speak with an expert about buying your home via the Right to Acquire scheme

Our mortgage brokers are available to answer any queries you may have on the Right to Acquire scheme. They can check your mortgage affordability and search for a competitive deal via the approved Right to Acquire mortgage lenders. Just give us a call on 01322 907 000 for expert advice when it comes to buying your home.

At Trinity Finance, we also offer other services related to the home-buying process. For example, we can recommend a solicitor to you, arrange your home insurance and advise you on the mortgage protection products available. If it’s out of office hours, send an email to us at info@trinityfinance.co.uk or an enquiry via our contact form. A Right to Acquire mortgage broker will reply to you with more information as quickly as possible.