In the UK, council houses provide shelter to over 200,000 homeless people. These properties are provided on rent to tenants.
Notably, over the past four decades, an increasing number of tenants have successfully purchased their rented properties through the Right to Buy scheme.
This is largely due to the significant discounts offered, making homeownership more accessible.
However, for someone who is interested in buying a council home, new rules being introduced could affect eligibility, discount rates, and more.
That’s why in this guide, we will be discussing all about new rules related to buying a council house, as these schemes are updated regularly, especially around the discounted property prices.
Note: Right To Buy scheme has been discontinued in Wales, Scotland, and has had changes in Northern Ireland, it remains active in England, consistently maintaining popularity.
Table of Contents
Eligibility Criteria to Buy A Council House
The Right to Buy scheme permits council tenants in the UK to purchase their council home at a discounted rate.
Eligibility criteria include the property being the applicant’s primary, self-contained residence, and having a public sector landlord for at least three years (not necessarily consecutively).
Joint applications are also possible with individuals sharing the tenancy or up to 3 family members who have lived with the applicant for the past 12 months.
Plus, former council homes sold to another landlord may still qualify under the “Preserved Right to Buy” scheme. However, you must enquire with your landlord for accurate information and this will be more complex.
As mentioned earlier, the Right to Buy scheme no longer exists in Wales, Scotland, and Northern Ireland, so you must check the rules for those countries separately.
Note: If you’re residing in housing association properties, you may have the option of Right to Acquire, a distinct scheme with different eligibility requirements. You can read more about right to acquire scheme here. (link to the article when published)
Discounts Available for Buying A Council House
The Right to Buy scheme offers significant discounts on the market value of homes for eligible buyers.
The maximum discount is £96,000 across England and £127,900 in London, increasing annually with the consumer price index (CPI).
Factors influencing the amount of discount include the duration of public sector tenancy, property type (house or flat), and home value.
As such, joint buyers can count the tenancy period of the applicant who has lived in the council house the longest.
Note that past Right to Buy usage can increase the discount you are eligible for.
That said, the discount for houses ranges between 35-70% and 50-70% for flats. Discounts may be reduced if the landlord has invested in home construction or maintenance within the last 10-15 years.
You may not get any discount if the landlord has already spent more money than the total worth of the council house.
How to Apply To Buy A Council House?
Step 1: Fill out the Right to Buy (RTB1) application form and send it to your landlord.
Step 2: Allow up to eight weeks (four weeks for tenants of over three years) for the landlord’s response.
Step 3: Consult your landlord for reasons if they decline your application. If they agree to sell, you must wait for an offer within eight weeks for freehold or twelve weeks for leasehold properties.
Step 4: Check the landlord’s offer details. It should include the following details-
- Estimated service charges for the first five years (for flats or maisonettes)
- Comprehensive property description, including associated land covered by the price
- Proposed purchase price details and calculation method
- Disclosure of any known structural problems, e.g., subsidence
- Information on the offered discount and the calculations involved
Step 5: Upon receiving the offer, you have twelve weeks to accept it. If you fail to respond within the time, the landlord will issue a reminder for you to reply within the following 28 days. They may also withdraw your application.
On the other hand, if you change your mind about buying the council house, you are free to halt the process and continue living on rent.
Can I Get A Mortgage for Buying A Council House?
Upon accepting the council house offer, you can explore mortgage options, albeit within a smaller pool of lenders.
While some lenders may accept the property discount as a deposit, it’s essential to verify this during initial mortgage inquiries.
If you need some assistance, feel free to connect with our mortgage advisors and they’ll help you get a mortgage based on your unique situation.
Beyond the mortgage and potential deposits, you must consider additional costs. After all, as the new homeowner, you must cover every property cost, including repairs previously covered by the landlord.
Additionally, legal fees such as conveyancing and stamp duty may be applicable once you buy a council house.
Can I Sell My Council House?
Yes, it is possible to sell your council house. However, selling the property acquired through Right to Buy comes with its fair share of challenges.
First, you must offer to sell it to your previous landlord or another social landlord in the area at a value determined by a district valuer.
If the landlord declines the purchase within eight weeks, you are free to sell the property to any buyer.
Additionally, if you sell the house within 12 months of purchase, the entire discount is due for repayment.
The repayment amount usually decreases from the second year onward, although landlords retain the right to request the full amount in a lot of cases.
The table below offers a rough guide on the percentage of discount you may have to repay to the landlord:
| Year Of Sale | Repayment Amount |
| 2nd year after purchase | 80% of discount |
| 3rd year after purchase | 60% of discount |
| 4th year after purchase | 40% of discount |
| 5th year after purchase | 20% of discount |
After residing in the property for over five years, repayment of the discount is not necessary.
However, it’s important to note that the repayment amount is determined by the house value at the time of selling, not the initial purchase.
So, say you purchase a £100,000 home with a 40% discount (£40,000) and later sell it for £120,000 after 18 months. Calculating 40% of £120,000 results in £48,000.
Since it’s the second year after purchase, the repayment would be 80% of £48,000 (not £40,000), amounting to £38,400.
Additional Rules When Buying A Council House
If your council home is located in an area of outstanding beauty, a national park, or a government-designated rural area for Right to Buy, your previous landlord may restrict potential buyers. This overall scenario is very rare.
This could mean selling the property to someone with at least three years of residency or work experience in the area.
Unfortunately, these conditions may complicate the mortgage approval process. But fret not because your landlord will inform you about such restrictions when you apply for the Right to Buy scheme at the outset.
Appeals
If the purchase process is hindered due to the suitability of the property for housing the elderly, you can appeal to a tribunal within 56 days of rejection.
Delays
Your landlord must adhere to specific time limits for processing your Right to Buy application. Failure to do so may lead to a reduction in the sale price.
To address delays, you must complete the “Initial notice of delay” form (RTB6) and submit it to your landlord. They must expedite the sale within a month or provide a “counter notice.”
Further, if your landlord doesn’t respond within a month, you can submit the “Operative notice of delay” form (RTB8) to potentially deduct rent from the sale price while awaiting a response. This process can be repeated for each delayed landlord response.
It is very rare these routes will need to be explored.
To Sum Up
Overall, navigating rules for buying a council house offers both challenges and opportunities. As such, understanding eligibility criteria, discount structures, and potential delays is crucial.
Notably, the Right to Buy scheme empowers tenants, yet differences in rules across regions require careful consideration. Not to forget the financial aspects, from deposits to repayment calculations, that demand thorough evaluation.
The ability to appeal decisions and address delays adds another layer of complexity. Hence, we strongly recommend aspiring homeowners to research, seek guidance, and remain vigilant throughout the process.
With proper knowledge of the new rules, buying a council house can become a smooth sail towards stable homeownership.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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