What is Right to Buy?
Right to Buy is a housing scheme that was introduced by Margaret Thatcher in 1980. It allows long-term council tenants to purchase their property at a discounted rate. The discount depends on the type of property you live in and how long you’ve lived there. The maximum discount is £84,200 (£112,300 in London).
Read more about what Right to Buy is.
Am I eligible for Right to Buy?
Before considering whether Right to Buy is right for you, you should check you’re eligible.
The eligibility criteria for Right to Buy is a little more complex than other government housing schemes. You probably have the Right to Buy if you are a secure tenant of a Right to Buy landlord, but you should still check. The government website has an eligibility quiz to quickly test if you’re able to make use of the scheme.
Things to consider
Once you know you’re eligible for the scheme, here are some things to consider.
Whether you can afford it
It might sound obvious, but the first thing you should do is decide whether buying your home is a financially viable option. There are the costs involved in the transaction itself, for example:
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Mortgage fees – the amount you’ll pay for setting up your mortgage (this can be hundreds of pounds).
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Conveyancing – this is the legal aspect of a property transaction. You’ll need to hire a Conveyancing Solicitor or a Licenced Conveyancer to deal with this, which typically costs several hundred pounds.
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Survey – even though you live in the property, it’s still a good idea to get it professionally checked to make sure there are no major issues with it. Surveys start at around £250, but will probably be more, depending on the size of the property.
You can get quotes for surveys and conveyancing here at reallymoving, to make sure you’re getting the best price.
As well as the costs of buying, you’ll also need to consider the costs associated with owning a property. You’ll need to make sure you can afford them alongside all your usual living costs. They may include:
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If you’d only be able to buy the leasehold there might be service charges, ground rent or renewal fees.
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Insurance – you might need to insure the building as well as the contents of your home.
Whether you have the time
With all the maintenance that might be involved, especially if it’s an older property, you’ll need to think about whether you actually have the time to own a home. Getting a survey can be helpful here as it will flag any areas of the building that might need repairs soon.
How long you’re planning on staying there
Again, this might sound obvious, but it’s something worth giving proper thought to. Renting a property gives you much more flexibility than owning one – if you decided you wanted to move, you could be up and gone in as little as a month depending on your contract. However if you own a property you’ll need to go through a sometimes lengthy selling process.
Also, if you sell a Right to Buy property within five years of purchasing it then you’ll need to pay back some of the discount. The rates are:
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100% if you sell in the first year
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80% if you sell in the second year
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60% if you sell in the third year
These percentages will be worked out based on the value of the property at the time of selling, so if property prices increase then you might end up paying back even more than you think.
It’s also worth bearing in mind that if you sell your Right to Buy property within 10 years of buying it you must first either offer it to your old landlord or another social landlord in the area. This can lengthen the selling process further.
Something else to consider when deciding whether to commit to staying there long-term is the community. If the property is part of a council-owned estate there might be a great community feel, with most residents being either long-term tenants or Right to Buy purchasers. However, if people don’t tend to stay there very long then you might not have a sense of community. This might suit you fine, but it’s something you should think about carefully.
The state of the property market
Don’t worry – you don’t need to study it extensively.
But it is worth considering whether now is a good time to buy. Research whether it’s a buyers’ market (there are lots of properties for sale and a shortage of buyers, therefore lowering prices) or a sellers’ market (there are lots of prospective buyers and not enough properties, and property prices are pushed up).
It's a good idea to have a vague awareness of this as ex-council owned properties are often the first to lose value if property prices slump. You don’t want to find yourself in negative equity when you want to sell the home, so if it’s currently a seller’s market it might be best to wait. The nice thing with Right to Buy is that no one is going to snap up the property if you wait a few months.
Our House Price Forecast can give you an idea of what’s to come with the property market.
Leasehold v freehold
It’s worth considering the pros and cons of leasehold v freehold – you might have a choice between the two, or you might only have one available and you’re not sure whether it’s right for you. Here’s a summary of the differences:
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Freehold
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Leasehold
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Cost more to buy, but no service/renewal charges
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Cheaper initially but extra fees/service charge/renewal costs throughout
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Buy permanently until you want to sell
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You may need to renew the lease, which is costly and time consuming
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Complete control over the property
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Some restrictions/permissions necessary e.g. regarding pets, subletting, building work
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No additional extras as part of your purchase
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Additional extras may be included e.g. a gym, car park, manicured gardens and cleaned communal areas
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Responsibility for fixing the property
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Freeholder is responsible, but you may have to pay towards repairs
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Own the land the property is on
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The land is owned by the freeholder. If the freehold is sold your ground rents and charges could increase further
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Usually a house
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Usually a flat
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Visit our guide to leasehold v freehold for more information about the pros and cons of each.
Right to Buy, although controversial because of its impact on the supply of social housing, can be a great way of getting your foot on the property ladder. However, like all purchases, it’s a big commitment, so don’t go through with it unless you’re absolutely sure.