Right to Buy Scheme: A Guide for Tenants in the UK

The Right to Buy scheme is a well-known UK government initiative that helps council and housing association tenants buy their home at a big discount. 

It has helped thousands of people become homeowners, often without needing a large deposit.

This guide will explain everything you need to know about the Right to Buy scheme, including who can apply, how the process works, and what to think about before deciding to buy.

What is the Right to Buy Scheme?

The Right to Buy scheme offers council tenants in England the chance to purchase their homes at a discounted rate. 

Introduced in 1980 by Margaret Thatcher, it was a major policy shift aimed at giving tenants more control over their housing and the opportunity to own their homes. 

The scheme has been beneficial for many tenants, helping them secure a home they already live in and potentially boosting their financial future through property ownership.

Am I Eligible for the Right to Buy Scheme?

To be eligible for the Right to Buy scheme, you must meet specific criteria:

1. You must be a secure tenant: This means you have a legal contract with your public sector landlord, such as a council or housing association.
2. Your home must be your only or main residence: You must live in the property you wish to purchase. It cannot be a second home or sublet.
3. The property must be self-contained: This means you do not share essential living spaces like kitchens or bathrooms with other tenants outside your household.
4. You must have had a public sector landlord for at least 3 years: The time does not need to be consecutive, but you must have been a tenant under a public sector landlord for at least three years.
5. No legal issues with debt: If you have severe debt problems like a county court judgement, you may not be eligible to apply.

You may also be eligible under the Preserved Right to Buy scheme if your home was once a council property but was transferred to another public sector landlord while you were living there. Check with your landlord to see if this applies to you.

If you’re in Northern Ireland, the Right to Buy scheme was officially closed in August 2022, so it is no longer available. 

But, Right to Buy was abolished in Scotland (2016) and Wales (2019) to protect social housing stock.

Some properties, such as those owned by the armed forces, are exempt from the scheme. Check the Gov.uk website for more details on exempt properties.

How Much Discount Can I Get?

The big benefit of the Right to Buy scheme is the discount you can receive. 

The amount depends on how long you’ve been a public sector tenant and whether you’re buying a house or a flat.

Houses

If you’ve been a tenant for 3 to 5 years, you get a 35% discount off the market value.

After 5 years, the discount goes up by 1% for each extra year, up to 70% or £102,400 (whichever is lower) across England, or £136,400 in London.

For example, if your house is worth £250,000 and you’ve been a tenant for 7 years, you’d get a 37% discount—£92,500 off. You’d pay £157,500. 

But, if the house is worth £350,000, the discount is capped at £102,400, so you’d pay £247,600.

Flats

For flats, you get a 50% discount if you’ve been a tenant for 3 to 5 years.

After 5 years, the discount goes up by 2% for every extra year, up to a maximum of 70% or £102,400 across England and £136,400 in London.

For instance, if your flat is worth £200,000 and you’ve been a tenant for 6 years, you’d get a 52% discount—£104,000 off. You’d pay £96,000. 

But. If the flat is worth £300,000, the discount is capped at £102,400, so you’d pay £197,600.

These discounts can cut down the price of your home, and in some cases, you may not need a deposit if the discount covers what mortgage lenders require.

If your landlord has spent money on building or maintaining the property, your discount could be reduced. 

You can check your discount using the Right to Buy calculator on the Gov.uk website.

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Can I Apply with Someone Else?

Yes, joint applications are allowed under the Right to Buy scheme. You can apply with:

• Someone who shares your tenancy.
• Up to three family members who have lived with you for the past 12 months, even if they aren’t officially part of the tenancy agreement.

This can help you meet the affordability criteria for a mortgage, as the lender will look at all applicants’ incomes. 

But, the property must be in the name of those listed on the Right to Buy application, even if someone else helps with the finances.

What is the Process for Buying My Council Home?

The process for buying your home under the Right to Buy scheme is relatively straightforward. 

Here’s a step-by-step breakdown:

1. Complete the RTB1 form. This is the application form for the Right to Buy scheme. You’ll need to fill it out with details about your tenancy and the property.

2. Submit your application. Send the completed form to your landlord, ideally through recorded delivery so you can track when it arrives.

3. Landlord’s response

Your landlord has 4 weeks to respond to your application (or 8 weeks if they’ve been your landlord for less than 3 years). If they decline, they must explain why. 

You can appeal the decision if the reason for denial is that the property is suitable for elderly people. 

In this case, you would need to appeal to a tribunal.

4. Receive your offer

If approved, your landlord will send you an offer within 8 weeks for freehold properties or 12 weeks for leasehold. This offer includes:

• The price you should pay and how it was calculated.
• Your discount and how it was worked out.
• A description of the property and any land included in the sale.
• Estimates of service charges (for flats or maisonettes) for the first 5 years.
• Any known structural problems with the property, such as subsidence.

If you disagree with the valuation, you can request an independent valuation from a district valuer through HMRC.

You’ll have 3 months to request this after receiving the offer. 

Once the valuation is complete, you’ll have 12 weeks to accept the revised price or decide not to proceed.

5. Decision time 

You have 12 weeks to decide whether you want to proceed with the purchase. 

If you don’t reply within that period, your landlord will send a reminder, giving you an extra 28 days to respond. 

If you still don’t reply, your application could be dropped. You can pull out of the sale at any time and continue to rent.

6. Arrange a mortgage

If you need to borrow money, now is the time to apply for a mortgage. 

Many lenders are familiar with Right to Buy purchases, and the discount you receive can often be used as the deposit. 

You’ll go through the same affordability checks as any other mortgage applicant.

7. Complete the purchase. Once you accept the offer, legal processes will begin, including contracts and property surveys. 

Once complete, you’ll own your home.

What If My Landlord Delays the Process?

Landlords must follow strict timelines for the Right to Buy process. If they delay, you could get a reduction in the sale price.

If your landlord is taking too long, you can send an “Initial Notice of Delay” form. 

If they still don’t act, you can send an “Operative Notice of Delay.” This means any rent you pay during the delay may be taken off the sale price.

What Happens If I Want to Sell?

If you sell your home within 10 years of purchasing it through the Right to Buy scheme, you must first offer it to your old landlord or another social landlord in the area. 

The sale price should reflect the current market value, and if you can’t agree on the price, an independent valuation will determine it.

If you sell your home within 5 years, you’ll have to repay some or all of the discount:

• 100% of the discount in the first year.
• 80% in the second year.
• 60% in the third year.
• 40% in the fourth year.
• 20% in the fifth year.

To make things clear, let’s say you bought your home for £150,000 with a 40% discount (£60,000), so you paid £90,000. 

If you sell it after 18 months for £200,000, the discount repayment is based on the new value. 

The 40% discount on £200,000 is £80,000. Since you’re selling in the second year, you’ll need to repay 80% of that, which is £64,000.

Is the Right to Buy Scheme Right for You?

The Right to Buy scheme gives you the chance to buy your home at a discount, but there are extra costs to think about, such as:

• Paying for maintenance and repairs, which your landlord used to handle.
• Mortgage payments and interest.
• Service charges for flats, which cover things like building upkeep and communal areas.

Before deciding, it’s worth considering both the benefits and drawbacks of the scheme to see if it’s the right choice for you.

Pros:

• Buy your home at a discount.
• Helps long-term tenants become homeowners.
• You can sell the property later for a profit.
• You don’t have to move when buying your home.
• It can give your family more housing stability.

Cons:

• Fewer social housing options for future tenants.
• You are responsible for maintenance and repairs.
• The discount may lead to an overvaluation.
• Some lenders may be cautious with Right to Buy mortgages.
• Financial strain if the property value drops after you buy it.

It’s a good idea to get independent financial and legal advice to make sure you understand the long-term responsibilities of owning a home.

The Bottom Line

Buying your council home is a big deal. You’ll have new responsibilities and financial commitments.

It can be hard to know what to do, from checking if you’re eligible and working out your discount to managing repairs and getting a mortgage.

A good mortgage broker can help you understand it all.

Here’s what a mortgage broker can do:

• Find the best deals for you.
• Make the paperwork easier.
• Give you advice on money and planning.
• Help you avoid problems and delays.
• Tell you about the best ways to get a loan with someone else or use a discount.

If you want to save time and avoid stress, contact us. We’ll connect you with a reliable broker who can help with your mortgage needs.