Tenants often begin considering purchasing the home they live in once circumstances allow them to.
To aid this endeavour, the UK government offers schemes like Right to Buy, designed to simplify the council house or housing association home purchase.
Property sales through Right to Buy have historically been high, with the all-time high being 167,123 properties sold in the 1982/83 financial year.
Of course, complexities arise once you realise the differences in the purchasing conditions and eligibility criteria for housing association vs council housing.
And while the two have certain similarities, the differences are rather stark.
Table of Contents
- What Is Right To Buy Scheme?
- What Is Council Housing?
- What Is A Housing Association?
- Housing Association Vs Council Housing: Eligibility Criteria
- Who Can Rent Through Council Housing?
- Who Can Rent Through Housing Association?
- Council Homes vs Housing Association Properties: Which is More Affordable?
What Is Right To Buy Scheme?
In the UK, the government offers tenants of housing associations and councils a right to purchase the house they have been living in at a discount. This is the Right to Buy policy that tenants may invoke to buy a self-contained home from their public sector landlord.
The policy was introduced in the 1980s and quickly became a sought-after option for tenants. Over time, its scope has been broadened significantly, with the scheme being modified to include housing association tenants.
Right to Buy gives the tenant access to a large discount, which draws house-hunting tenants to the scheme. The discount is calculated based on how long they have resided in the property, the property value, and the property type.
This scheme is considered by many to be beneficial enough to form the basis of choosing between a council house or housing association property. Naturally, its popularity has always been high among first-time buyers.
What Is Council Housing?
Council housing is property provided by the local authority (or a council) to those with the highest housing need. By law, these councils are required to provide shelter to those in need.
After applying for council housing, the prospective tenant is placed on a waiting list based on a “banding” or “points” system. These points and bands are assigned to tenants based on how urgently they need shelter.
The more dire the tenant’s circumstances, the more likely it will be for them to receive a council home.
For instance, a homeless person living in poor conditions or with an illness that is exacerbated by their living conditions has the highest priority.
What Is A Housing Association?
Housing associations are non-profit organisations that scout properties for those who earn a low income or have limited funds. These associations match the individual’s available funds with a home they can live in comfortably.
After the application process is finished, the housing association puts the applicant on a waiting list based on how urgent their needs are. Certain families may have to wait longer before the association finds them a suitable property.
Importantly, purchasing a property from a housing association is often termed the right to acquire rather than right to buy.
Housing Association Vs Council Housing: Eligibility Criteria
The government has defined clear rules regarding who can apply to purchase a council home.
Four main eligibility criteria are shared among all council housing providers, as detailed below:
- The tenant has had a public sector landlord for three years or more
- The tenant is secure
- The property being purchased is the tenant’s primary home
- The property is self-contained
Beyond this, there is a time limit that you must be wary of while applying for Right to Buy. A conveyancing solicitor can provide valuable information about this time limit, allowing you to complete the transaction promptly.
On the other hand, the set of eligibility criteria for housing associations is more complex. For starters, the property must be self-contained and your only home to be eligible for application.
Like with council housing, you may apply for the association property if you have had a landlord in the public sector for at least three years.
The landlord may be from housing associations, councils, foundations and NHStrusts, and the armed forces.
The property you wish to buy must also fit an eligibility criterion to be fit for purchase. For this, the home you wish to buy should either have been:
- Transferred from a local council to housing associations after 31st March 1997
- Bought or built by housing associations after 31st March 1997
By law, your landlord is required to be registered with the Regulator of Social Housing.
Who Can Rent Through Council Housing?
Since Council Housing operates on a points-based priority system, the people who can rent through council housing must have enough points assigned to them to qualify.
However, this can vary from one council to the next, as there is no standardised points system nationwide.
Even so, you can consider the chances of receiving a council home to be high if you fall into the following categories:
- You have dependent children
- Someone in your family is pregnant
- 16-17-year-old children who are not under the care of social services
- 18 to 20-year-olds who have been under the care of social services between 16 and 18
Other factors that contribute to a higher priority include the following:
- Being of old age
- Being legally homeless
- Residing in poor living conditions, such as overcrowded or unsafe homes
- Having a mental or physical disability
- Being a victim of physical or mental harassment
- Being an Armed Forces veteran
- Being a former resident of an institution
- Being in care while being over 21 years of age
If you fit one or more of these categories, you will have a higher priority than the baseline defined by the local council. That said, it’s not uncommon for applicants to be rejected even in multiple categories if they display severely anti-social behaviour.
Additionally, if it is provably demonstrated that an applicant can afford private housing, they can be denied accommodation.
Who Can Rent Through Housing Association?
The eligibility criteria for those wishing to become a tenant are somewhat similar to those for council housing in that they are meant for the less privileged.
These homes are also reserved for those who couldn’t meet the criteria for a council home and are still in dire need of a home.
Notably, if you mortgage the housing association property through Right to Buy, try to improve your credit score before applying.
This can significantly improve your chances of receiving a mortgage, especially as a mortgage with bad credit is generally frowned upon by lenders.
Council Homes vs Housing Association Properties: Which is More Affordable?
The rent for council homes is calculated differently than that for housing association properties typically.
Since the government applies a discount to the property value when you purchase the property, council homes tend to be cheaper than housing association properties who do not usually provide such a high level of discount.
This discount is calculated based on your time as a tenant with a public sector landlord and the property type.
The maximum discount for your council home is £127,900 in London or £96,000 elsewhere in England.
In contrast, housing associations set their rents based on social or affordable rates, a fraction of the market rates.
The social rent rate is 50% of the value of local market rent, whereas the affordable rent rate is 80% of local market rent.
The discounts applicable for housing association properties are between £9,000 and £16,000, based on the property type, location, and value.
1. What makes someone ineligible to buy a housing association property through Right to Buy?
Right to Buy is not applicable for a housing association property if the applicant is being made bankrupt. Alternatively, if a court orders them to leave the home, the applicant cannot use the Right to Buy to purchase the property.
2. Is Right to Buy only applicable to properties in which you currently rent?
Yes, Right to Buy only applies to the properties you currently rent. It is specifically designed for tenants to purchase the property they live in from their landlords, provided the eligibility criteria are met.
Council housing is the more cost-effective of the two and encompasses a much larger group of people. The caveat with council housing is that it tends to have much longer waiting lists, which makes getting the right home tricky.
On the other hand, housing associations tend to be the relatively expensive option as there is typically less discount than council properties. Despite being a little pricier of the two, getting a home through a housing association can be an effective process for the buyer.
The bottom line is that your circumstances will dictate if it would be better to try to get a council house or approach a housing association with your housing needs. If you don’t fall into any of the categories defined by the local council, a housing association may provide the home you need.
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.
I am CeMAP & CERER qualified mortgage adviser and have helped a number of clients realise their dreams when they thought it would not be possible. I’m skilled at getting mortgages sorted for people with a history of missed payments, CCJs, defaults, debt management programmes, IVAs and bankruptcies.