Right to Buy is a Government-backed scheme, which is designed to help local authority tenants buy the property they live in at a discounted price. The scheme has been running for over 40 years, and is currently only applicable for council home tenants (and some housing association tenants) in England and Northern Ireland, as it’s been abolished in Scotland and Wales.
To be eligible for a Right to Buy mortgage, you’ll need to have been a public sector tenant for at least three years. The longer you’ve been a tenant, the bigger the discount you could be entitled to. This type of scheme can be a great path to home ownership if you want to buy but don’t want to move from the home you currently live in. However, you should bear in mind that if you plan to sell your property within the first five years of buying it, you’ll have to pay back the discount. Depending on when you sell, this could either be the full discount amount, or just a portion of it.
Right to Buy is very similar to a Right to Acquire mortgage - the main difference is that Right to Buy is mostly for council tenants, whilst Right to Acquire is for housing association tenants. If you’re interested in either scheme, you should first check with your landlord which one you’re eligible for.
Another option for those looking to buy a home using a smaller deposit is to take out a Shared Ownership mortgage. With the Shared Ownership scheme, you buy a portion of your property and a housing association owns the rest of it. You’ll pay rent on the portion owned by the housing association, but this plus the mortgage payment on your share is usually cheaper than the mortgage payment you’d need to make to buy the entire property.
Right to Buy can be a great way to get a foot on the property ladder, and you may not have to save a deposit as many Right to Buy lenders will treat the discount as a deposit. However, your choice of lenders may be limited as not all mortgage providers offer this type of mortgage.
The type of property you’re buying may also affect which mortgages you’re eligible for. Some Right to Buy mortgage providers, for example, may not be willing to offer mortgages on high-rise flats.
L&C can advise which lenders will be able to help you so you can secure the best mortgage deal for your needs.
Right to Buy mortgage process
The first step to getting a Right to Buy mortgage is to establish whether you’re eligible. Then, you must:
- Fill in the Right to Buy application form (RTB1 notice) and send it to your landlord
- They must say yes or no within 4 weeks of your application, or within 8 weeks if you’ve been with your landlord for less than 3 years
- If your landlord agrees to sell you the property, they’ll send you an offer notice. This should be done within 8 weeks for a freehold property, or within 12 weeks for a leasehold property.
You’ll then have up to 12 weeks to accept or decline their offer. If you accept, you should then find a mortgage through the usual channels - like coming to L&C to find out what deals you’re eligible for.
Right to Buy mortgage eligibility criteria
There are some specific Right to Buy eligibility criteria you must meet before taking on this type of mortgage. These include:
- You must be living in the property as your main home
- The property must be self-contained, meaning you don’t share any rooms with people outside of your household
- You’re a secure tenant with a legal contract between you and the landlord
- You’ve had a public sector landlord, like the council, for at least three years - although this doesn’t have to be three years in a row
- You haven’t had any county court judgements or other legal issues with debt
If you live with someone else, you can make a joint mortgage application if they share your tenancy, are a spouse or civil partner, or if they’re a family member who’s lived with you for the past 12 months - even if their name isn’t on your tenancy agreement.
The maximum discount on buying your home is £102,400 across England, except in London boroughs where it is £136,400 - but this figure will increase each year in April in line with the consumer price index (CPI). You won’t automatically be entitled to the maximum discount as this depends on how long you’ve been a tenant, the type of property you’re buying, and your home’s value.
With this type of mortgage, the discount is usually used as your Right to Buy deposit, so the mortgage deals you’re entitled to won’t depend on how much deposit you have saved, unlike regular mortgages. However, in some cases, lenders may require you to provide some of your own deposit too.
Finding the Right to Buy mortgage deal
As an expert Right to Buy mortgage broker, L&C is here to help you find the best Right to Buy deal on the market. We offer fee free, impartial Right to Buy mortgage advice to help you understand whether this is the right type of mortgage for you, and find you the best deals to suit your circumstances.
Some lenders will offer you the same mortgage products as anyone else, while others will have deals which are specifically designed for those buying a home through the Right to Buy scheme. Get in touch with L&C and we can advise on all the options that may be available to you.
Right to Buy mortgage repayment plan
Once you’ve secured a Right to Buy mortgage, you’ll repay it in the same way as any other mortgage. You’ll make monthly payments against the amount you’ve borrowed for the duration of your mortgage term.
At the end of your fixed term, you’ll usually be transferred to your lender’s standard variable rate, which is typically higher than the introductory deal you’ve been paying. You may be able to leave the mortgage early, but you should expect to pay an Early Repayment Charge.
Remember, too, that if you sell your home within five years of buying it, you’ll have to pay back a proportion of the discount you received on your purchase, starting with the whole deposit if selling within the first year.
Apply for a Right to Buy mortgage with L&C
If you’re a council or local authority tenant and want to buy the property you’re living in, L&C can help as a Right to Buy mortgage adviser.
We’ll support you through the application process from start to finish, and our experts will always be on hand to provide any advice you might need. L&C can also help you to access Right to Buy mortgages that may not be available by going directly to lenders, so get in touch today to find out what we can do for you.
