What is Right to Buy?
Right to Buy is a government scheme. It gives secure council tenants in England the legal right to buy the home they live in for less than its market value. The scheme dates back to the 1980s, and millions of tenants have used it to become homeowners.
How big your discount is comes down to three things: how long you have been a tenant, whether your home is a house or a flat, and where in the country it sits. A longer tenancy earns a bigger discount, up to the cap set for your region.
Who qualifies for Right to Buy?
To qualify you need to be a secure tenant of a council property in England, with at least three years as a public sector tenant behind you. Those three years do not have to run back to back, and they do not have to be in the same home. Time you have spent renting from any council, a housing association, or armed forces accommodation all counts toward the total.
A few types of property are left out. Sheltered housing for elderly or disabled tenants is excluded, and so are homes lined up for demolition and some properties in rural areas that carry specific restrictions. When you send in your application, the council will confirm whether your home qualifies.
How does a Right to Buy mortgage work?
Your Right to Buy discount does the job of a deposit. Say your home is worth £200,000 and your discount comes to £80,000. You then only need a mortgage of £120,000. Because some lenders will cover the full 100% of the discounted price, you might not have to put in any savings of your own.
Not every lender does Right to Buy, but plenty of mainstream and specialist lenders run mortgages made for it. Other routes such as Help to Buy and Shared Ownership work in their own way, though they share the same aim of getting people onto the ladder. A broker looks at your income and credit history, then points you toward the lenders offering the sharpest rates and the best odds of approval.
The application process
You begin by filling in a Right to Buy application form, known as the RTB1, and sending it to your council. The council then replies with a Section 125 notice, the document that sets out the price, your discount, and the terms of the sale. They have four weeks to respond for a house, or eight weeks for a flat.
With that offer in hand, you can apply for your mortgage. If you are still getting to grips with what a mortgage involves, our guide covers the groundwork. Nothing forces you to complete by a fixed date, but it pays to keep things moving. Your adviser can line up a mortgage agreement in principle before the formal offer lands, so you are ready to go the moment it does.