What is a Right to Buy mortgage?
Right to Buy mortgages are like regular residential mortgages. Anyone purchasing their council house through the scheme can access a range of deals.
There are a range of things that play a part in how much you can borrow. Borrowing amounts are determined by property value, deposit size, income, and credit history.
What is the Right to Buy scheme?
The Right to Buy scheme allows tenants in England to purchase their rented public-sector homes at a discounted price. A similar scheme exists in Northern Ireland with slight variations.
Government policy changes in 2015 expanded Right to Buy to include housing association tenants in England. This type of scheme is commonly known as ‘Right to Acquire’.
Up until the 20th of November 2024 the maximum discount was £102,400, or £136,400 if you’re in London. However, this changed from the 21st of November 2024 as the Government announced in their 2024 Autumn Budget.
Your local council will be able to confirm exactly how much discount you qualify for, subject to the maximum available discount. Below we have highlighted the new discounts that have been put in place as of 21st November 2024. The main change is that the discounts will now be region specific, whereas before only London had a different maximum discount. Now, each region listed had different maximum discounts.
The maximum discount you will pay on or after 21st November 2024 is whichever is lower out of the following two options:
- 70% of the property’s value
- The maximum discount for your region
| Region | Maximum discount | Exceptions |
| North East | £22,000 | Not applicable |
| North West | £26,000 | Not applicable |
| Yorkshire and the Humber | £24,000 | Not applicable |
| East Midlands | £24,000 | Not applicable |
| West Midlands | £26,000 | Not applicable |
| Eastern | £34,000 | £16,000 in the district of Watford |
| South East | £38,000 | £16,000 in the areas of Reading Borough and West Berkshire, Hart District, Oxford and Vale of the White Horse District, the boroughs of Tonbridge and Malling, Epsom and Ewell, and Reigate and Banstead |
| South West | £30,000 | Not applicable |
| London | £16,000 | £38,000 in the boroughs of Barking and Dagenham and Havering |
Can I buy my council house?
The basic qualifying factor is that you must have been a council tenant for 3 years or more. If the property was sold by the council to another landlord, then you must have been the tenant at the time of that sale. (The 3 years’ public sector tenancy do not have to be consecutive or in the same property.)
Next, some qualifying factors about you:
- You must not have any legal problems with debt.
- You must not have any outstanding possession orders against you.
And about the property:
- The property must be your only, or main, residence.
- It must not be specialist housing intended for disabled or elderly tenants.
- It must not be scheduled for demolition.
Can I afford to buy my council house?
It is important to consider the financial aspect of purchasing your council property early on. You’ll need to determine if a mortgage is affordable for you by calculating monthly payments. You will also need to factor in additional costs, like insurance.
Compare your outgoings to your income to ensure affordability on an ongoing basis. Be prepared for additional costs, like survey fees and service charges for flats. Make sure you have enough savings to cover all expenses associated with the property purchase.
How to apply for Right to Buy
If you meet the criteria and are sure you can afford it, the first step is to submit an application using the “Right to Buy application” form (RTB1 notice). You have the option to fill it out online or request a paper copy from your landlord.
As a public sector tenant, you have the ability to apply on your own. Joint applications can be made in the names of joint tenants or up to three family members who have resided at the property for at least 1 year.
You should receive a decision from your landlord within 4 weeks, or 8 weeks if you have been their tenant for less than 3 years. If the answer is no, they will provide an explanation. If they approve, they will proceed to make you an offer.
Getting a Right to Buy offer
If your landlord has agreed to sell, they will send you an offer notice (S125). That will take up to 8 weeks to arrive for a freehold property, or 12 weeks for a leasehold property.
The offer tells you what the property is valued at and how much discount you will receive. It will also outline any known structural problems and any terms and conditions that will apply.
The amount of discount awarded depends on how long you have been a tenant, and whether the property is a house or a flat.
Discount for a house:
- Basic discount: 35% (applies up to 5 years’ tenancy)
- Additional discount over 5 years’ tenancy: 1% per year
- Discount capped at: 70% or the maximum discount for your region
Discount for a flat:
- Basic discount: 50% (applies up to 5 years’ tenancy)
- Additional discount over 5 years’ tenancy: 2% per year
- Discount capped at: 70% or the maximum discount for your region
Things to watch out for:
If your landlord doesn’t reply by the deadline, or if you don’t agree with the valuation, you can appeal.
Arranging a Right to Buy mortgage
If you go ahead with the purchase, you will need to get a survey done. This is likely to be part of the mortgage application process if one is required. If you do not already have a solicitor, you will need to appoint one.
You may also need to arrange a mortgage. If you’re buying a property that needs some updating and asking “how can I buy my council flat and put in a new kitchen as well” this is the time to see exactly how much you can borrow and confirm that you can afford the full amount.
Right to Buy mortgage with a partner
Buying a home through a scheme is easier with a partner. Lenders prefer names on Right to Buy paperwork to match the mortgage. Some lenders may allow joint mortgages even if the tenancy is in one name.
Can I get a Right to Buy mortgage if I am retired?
Retirees may be eligible for a Right to Buy mortgage, but age can affect options with lenders. Eligibility depends on affordability, not age, so securing a mortgage as a retiree is possible if you meet the criteria.
Right to Buy if I am self-employed
You may think that being self-employed means it’s difficult to get a mortgage in general. However, you can still purchase a home through the Right to Buy scheme.
Self-employed individuals shouldn’t encounter extra challenges when applying for a mortgage. You will typically be assessed the same as any other applicant.
Lenders need to ensure self-employed individuals can afford loans and understanding their income assessment process is crucial for approval.
Right to Buy Mortgages with a bad credit history
Specialist lenders offer Right to Buy mortgages for those with bad credit. Your credit history will show eligibility and terms, with defaults, CCJs, and bankruptcies staying on your record for 6 years.
Time can lessen the impact if no new issues arise. Working with a specialist broker can improve your chances of securing a deal that meets your individual circumstances.
Right to Buy mortgage brokers
If you’re looking to buy your council house or housing association property, we can help you find a mortgage deal that suits you.
As with any financial product, it’s always worth seeking expert advice first. At IMC Mortgage Brokers, we can advise on the Right to Buy options that are available to you, and our team will happily guide you through the whole application process.
We work closely with leading brands and smaller specialist lenders, meaning we have access to exclusive mortgage deals to suit all requirements. Get in touch today to find out how we can help.
Right to Buy FAQs
Most lenders treat the Right to Buy discount as a deposit, but some may still require a cash deposit. Putting a deposit down can reduce your monthly mortgage payments and give you access to better deals.
You will still have to budget for other costs, however, including survey fees, solicitors and, depending on the purchase price, Stamp Duty.
The Right to Buy scheme applies to both houses and flats and does not specifically exclude flats in high-rise buildings. However, some lenders have restrictions on the types of properties on which they lend and may not grant mortgages on flats in high-rise buildings.
You should ensure that any lenders or mortgage brokers you speak to are aware up front of the type of property you want to buy.
The Right to Buy scheme has no age limit, but some lenders do. You can apply jointly with family members and some lenders may be flexible with age requirements if applying with a younger family member.
Borrowing extra money against your property for home improvements may be possible depending on its value, Right to Buy discount, and lender’s LTV ratio.
For leasehold properties, you may need permission from the freeholder (usually your landlord) before making changes to the property.
Buying a property through Right to Buy doesn’t disqualify you from letting it out later. Depending on your mortgage type, you may need a Buy-to-Let mortgage or consent to let with a standard residential mortgage.
There may be fees involved in applying for consent to let or switching to a Buy-to-Let mortgage.
Some lenders offer various sorts of incentives or rewards to attract would-be borrowers to their mortgage deals. These can take the form of either straightforward cashback payments, or payment towards a particular fee or expense. For example, a free valuation or paying a portion of the property’s Stamp Duty.
This type of reward can be attractive, but always consider the bigger picture in terms of the overall product cost. A product with an £1,000 cashback incentive may not be such a good deal if there was another product that would save you more over your mortgage payments.
Obtaining a mortgage if your sole income is benefits can be a challenge. This is because most lenders will not consider benefits as an income. There are also some challenges that those on benefits face such as:
Affordability checks: Lenders will primarily assess your ability to repay the mortgage. Benefits alone might not be enough income to qualify for a mortgage, especially considering potential interest rate hikes.
Limited lenders: Not all lenders consider benefits as income when assessing affordability. You might need to find a specialist lender who caters to borrowers with benefits.
