What Is a Right to Buy Mortgage?
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 the market value of the property, the size of your deposit, and various affordability criteria such as your income and credit history.
Looking to buy your council house or flat? We can help.
Right To Buy
What is the Right To Buy scheme?
Right to Buy is a scheme that allows existing tenants of public-sector homes in England to buy the property they currently rent, at a price discounted below the market value. Similar schemes are available in Northern Ireland, but the rules are slightly different. Right to Buy has existed in one form or another for decades, and enjoyed particular popularity in the 1980s, with over a million council houses sold to tenants.
While changes in government policy reduced discounts and changed who could make use of Right to Buy, further changes to the scheme in 2015 have made Right to Buy both 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 – and increased the maximum Right to Buy discount available – it is now £84,200 (or £112,300 in London), increasing in subsequent years in line with the Consumer Price Index (CPI).The maximum discount is correct as of April 2020.
Right To Buy Topics
The actual percentage discount off the market value of your home with Right to Buy varies depending on the type of property, and how long you have been a public-sector tenant:
- 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.
You apply for 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
- How the price was worked out
- Your Right to Buy discount and how it was calculated
- Description of the property, plus any land, that is included in the price
- 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. This must be requested within three months of the offer.
Having the opportunity to purchase your home via the right to buy scheme can be an exciting time however it may not be possible based on your sole 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 as quoted on the right to buy paperwork mirror that of the mortgage and 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 and for some it may be possible to arrange a loan on a joint mortgage sole proprietor basis that works very similar to a guarantor.
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 your financial circumstances. 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 can advise on the Right to Buy options that are available to you, and 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.