A right to buy mortgage is any mortgage that can be used with the government’s right to buy scheme. Not all lenders offer mortgages for this type of purchase, but a mortgage broker should be able to help you find a suitable one. Before you look at getting a mortgage, however, it’s important to find out if you qualify for the right to buy scheme. We’ll look at how the scheme works, who’s eligible and what size of discount you might be able to get.
Right to Buy is a government scheme available in England which allows most council tenants to buy their rented home at a large discount.
The first step is to complete the right to buy application form
You’ll then send the completed form to your landlord, who has four weeks to make a decision. This is extended to eight weeks if they’ve been your landlord for less than three years
If the landlord agrees, they have eight weeks to send you an offer on a freehold property (most houses are freehold) or 12 weeks to send you an offer on a leasehold property (usually, but not always flats). If they refuse to sell to you, they must provide a reason
You have 12 weeks from the offer date to choose whether to accept it or not
Once you’ve accepted an offer it’s time to look for a suitable mortgage. It’s a good idea to speak to an independent mortgage broker, as they have access to the most lenders. Our broker partner Mojo offers free mortgage broker advice. You can also compare mortgages online
You’ll need to meet the following criteria in order to be able to buy your council house or flat:
The property must be your only or main home
It must be a self-contained property - so no shared accommodation
You must be a secure tenant (sometimes called a flexible tenancy) - which means you have a lifetime tenancy. Most council tenants are secure, unless you are on a introductory, temporary or demoted tenancy
You’ve been a public sector tenant for at least three years (doesn’t need to be in a row). Only tenants currently in a council property are eligible, but past tenancies with housing association, NHS trust or armed forces properties will count towards your overall tenancy length when adding up the three years minimum needed
Your home is not sheltered housing or adapted for elderly or disabled tenants
You don’t have any outstanding possession orders against you or serious debt problems such as bankruptcy
You don’t already part own your home with the council
Right to acquire is a very similar scheme that’s available to some housing association tenants, however, the discounts are smaller (between £9,000 and £16,000) and the rules are slightly different. You will still need a minimum public sector tenancy of at least three years.
Find out more about the Right to acquire scheme
When buying your council home, the size of your discount will depend on whether it’s a house or flat, the total length of your tenancy in the public sector and the property value.
The longer you’ve been a tenant, the larger your discount is, up to a maximum of 70% or £96,010 (£127,940 in London), whichever is lower. The maximum discount threshold also increases each April in line with the consumer price index.
This table shows the size of discount you should be entitled to, depending on the property type and length of your tenancy:
|Length of tenancy
|Longer than 10 years
|40% +1% extra for each year up to a maximum of 70% or the value threshold
|60% +2% extra for every year up to a maximum of 70% or the value threshold
A few important things to note:
If you’ve used right to buy before your discount may be reduced
If your landlord has spent money building or maintaining your home in the last 10 years and your landlord built or acquired your home before 2 April 2012 your discount may be reduced
You won’t be entitled to any discount if your landlord has spent more money on your home than it's currently worth
Most lenders will allow you to use your discount as a deposit, so you won’t usually need to provide one in order to get a mortgage. However, this is not true of all lenders, so if you want to ensure that you can use your discount as a deposit, a mortgage lender will be able to advise you on which lenders will accept it.
That said, bear in mind that there are also other costs involved with buying a home, so you will need to have some savings in order to take out a mortgage for right to buy.
Yes you can, so long as the joint applicants fulfil one of these criteria:
They share your tenancy
They are a member of your family who have lived with you for 12 months (not necessarily on the tenancy) - up to 3 additional family members can be added
They are your spouse or civil partner
Once you’ve bought your council house or flat, it is possible to sell it on, however, there are some important points to consider:
If you sell your house within 10 years of purchase, you must:
Offer it back to your previous landlord or another public sector landlord in the area - although you can sell it on the open market if they do not agree to the sale within eight weeks
If you sell your house within 5 years of purchase, you must also:
Pay back some or all of your discount -
100% if sold in the first year
80% in the second year
60% in the third year
40% in the fourth year
20% in the fifth year
You may also be more limited in your options to sell if your property is considered to be a rural right to buy property, but this will be made clear when you buy it.
If you’re not eligible for the right to buy or right to acquire schemes, but would benefit from help with buying your own home, there are a number of alternative home ownership schemes available across the UK that may be helpful.
There are over 40 lenders willing to consider right to buy applications, including some high street banks such as NatWest and TSB, however, there are usually additional criteria to meet if using a mortgage alongside the scheme. For example, some lenders only lend on houses and not flats or limit the loan to value (LTV) of the borrowing if you’re using a mortgage to buy a council house.
If you use the right to buy scheme you are only eligible to buy the council property that you’re currently living in, so you won’t need to search for one.
This is where you live in an ex-coucil property that was sold to another landlord - usually a housing association - while you were living in it, and in some cases, you’re still able to buy it.
If you think this may apply to you, it’s worth asking your landlord whether you have the preserved right to buy your home.
Having benefit income does not restrict you from the right to buy scheme, however, it can be difficult to get a mortgage if your income is only made up of benefits.
There are lenders that will consider benefit income when calculating your mortgage (except housing related benefits), but most will also prefer you to have another form of income from employment, a pension or savings.