Right to Buy Mortgages

Right to Buy mortgages work in the same way as typical residential mortgages. In fact, anyone purchasing their council house through a Right to Buy scheme has access to the same mortgage deals as anyone else.

The amount you can borrow will depend on several things. This includes the value of the property and your deposit size. There will also be various affordability criteria, such as your income and credit history.

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Author: Carl Shave - CEO and co-founder
Last updated: 15 Apr 2024

What is the Right To Buy scheme?

The scheme allows existing tenants of public-sector homes in England to buy the property they currently rent. This will be at a price discounted below the market value. Similar schemes are available in Northern Ireland, but the rules are slightly different. The scheme has been around for decades, with increased popularity in the 1980s.

While changes in government policy reduced discounts and changed who could make use of Right to Buy. There were changes to the scheme in 2015, that made it more attractive and more widely available to public-sector tenants in England. The recent changes extended the scheme to make it available to housing association as well as council tenants.

The government has also reduced the qualifying tenancy period. You now only need to have been a public-sector tenant for three years, rather than the previous five.

They also increased the maximum Right to Buy discount available. It’s now £96,000 (or £127,900 in London), increasing in subsequent years in line with the Consumer Price Index (CPI). The maximum discount is correct as of April 2023.

An introduction to Right to Buy Mortgages

Right To Buy Topics

Looking to buy your council house or flat? We can help!

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Getting a Right to Buy mortgage?

So, how does the Right to Buy scheme work when getting a mortgage?

They are essentially the same as any other type of mortgage. Although, not all lenders will accept this type of application. You should therefore still have a choice of interest rates available such as fixed or tracker for example.

If you are unsure about what options are available to you, get in touch and we will pair you with one of our experts.

The Right to Buy application process

You apply for a Right to Buy mortgage by sending a completed application form to your landlord, who will respond by sending you an offer. This will outline the following:

  • The price they believe you should pay for your property.
  • Who worked out the price?
  • How was your Right to Buy discount calculated?
  • What is included in the price: a description of the property and any land.
  • Estimates of service charges (for a flat or maisonette) for the first five years.
  • Any existing problems with the property’s structure.

Once you have received an offer, you have 12 weeks to confirm your intention to buy. You also have the right to request an independent valuation if you believe the landlord has overvalued your home. You must request this within three months of the offer.

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How much is the Right to Buy discount?

The actual percentage discount off the home depends on the type of property. The amount of time you’ve been a public sector tenant for also has an impact:

  • For houses, public-sector tenants become eligible for a 35% discount after three years’ tenancy. After five years’ tenancy, the discount increases by 1% for each extra year you have been a public-sector tenant.
  • For flats, public-sector tenants become eligible for a 50% discount after three years’ tenancy. After five years’ tenancy, the discount increases by 2% for each extra year you have been a public-sector tenant.

Can I get a Right to Buy mortgage with my partner?

Having the opportunity to purchase your home via the Right to Buy scheme can be exciting. However, it may not be possible based on your circumstances or you may, simply through choice, wish to purchase your home with your partner.

Typically, a lender will wish to see that the names quoted on the Right to Buy paperwork mirror that of the mortgage, then in turn the property ownership. However, this may not always be the case.

Some lenders may look at arranging the mortgage in joint names even if the Right to Buy is in your name only. For some, it’s possible to arrange a loan on a Joint mortgage sole proprietor basis. This works very similar to a guarantor mortgage.

Right to Buy mortgage brokers

At Just Mortgage Brokers, we work with over 90 lenders offering Right to Buy mortgages. If you’re looking to buy your council house or housing association property, we can help you find a mortgage deal that suits you. Even if you have a poor credit history, it doesn’t mean you won’t be eligible for a Right to Buy mortgage.

As with any financial product, it’s always worth seeking expert advice first. At Just Mortgage Brokers, we advise on the Right to Buy options that are available to you.

Our team will happily guide you through the whole application process. We work closely with leading brands and smaller specialist lenders, meaning we have access to exclusive mortgage deals to suit all requirements. Get in touch today to find out how we can help.

 

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Right to Buy FAQs

The Right to Buy scheme was introduced to allow tenants the ability to own the home they live in. Its design did not enable the property to be rented. Therefore, only residential mortgages are available when you look to purchase.

As life events and plans change, the council may permit you to rent the property out during the clawback period. You should always seek their permission before doing so.  After the clawback period, you can use the property as you wish.

Not many lenders will permit this, as the Right to Buy discount may need to be paid back in part or in full if you sell the property. Although, during the clawback period, there are usually some who will consider it.  Strict terms will apply so you’ll need to check this all out prior to making any plans.

Yes, you can remortgage your Right to Buy property. Essentially, lenders consider this in the same way as any other mortgage application. The main exception to the rule is that the discount clawback period still needs to be taken into consideration.

Also, there will likely be a charge registered by the council or housing association for the discount provided.  This charge, if still in place, will create a small amount of additional legal work that will incur an additional cost.

When taking out a mortgage for Right to Buy you do not need to have a deposit. Many Right to Buy mortgage lenders will accept the discount provided instead.  This is not the case for all lenders however, so you may find you may still need to contribute some towards the purchase.

The good news is that many lenders consider the discount as a deposit. They typically offer you rates applicable for the lower loan-to-value this provides against the full market value.  Do note that there will still be costs involved when buying your home so do ensure you have adequate funds to cover these.

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