Right to buy – how to buy property using the right to buy scheme
What is a right to buy?
A right to buy is the right granted to tenants renting properties from the local authority to buy the leasehold of their flat or the freehold of their house at a discount.
The tenant must have rented their home for a specified period of time under a particular tenancy. Also, the discount will vary according to the length of time the tenant has been renting their home.
Who is eligible?
Firstly, you will need to check whether you’re eligible for the Right to Buy.
By law, anyone who is a secure tenant and who is renting the property as their only or principal home is eligible. The property also needs to be self-contained and the home must be a separate dwelling i.e. the property must not be shared so that for example there is no shared kitchen between tenants in the building.
The secure tenant is able to apply either on their own or jointly with up to three members of their family that have been living together jointly for the past 12 months or anyone who is a joint tenant.
The age requirement in England is to be over 18 years of age. The family member can be a parent, sibling, spouse, cohabiting couples.
A secure tenant is one who can normally live in the property for the rest of their life as long as they do not break the conditions in their tenancy. In addition, the tenant must have lived in the property for three years although they do not have to have lived in the same property for three years, it can be that they have lived in numerous properties with local authority landlords.
Who is not eligible?
Where a tenant has been made bankrupt or has a bankruptcy petition pending or they have entered into individual voluntary arrangements with creditors, they cannot apply for the right to buy. Also, a tenant is not eligible if there is a possession order in place or a court order suspending the right to buy. In addition, a tenant who is not using the property as their main or only residence will not be able to exercise their right to buy.
Are all properties suitable for the right to buy?
No. For example, where the landlord decides that the property is particularly suitable for the elderly, that property will be exempt from the right to buy. However, the tenant can challenge their landlord’s decision by applying to court.
Other properties that can be exempt from the right to buy include properties that the landlord has the practice of renting to persons who are suffering or have suffered from a mental disorder or any properties that have been designed by the landlord for occupation by physically disabled persons. In addition, the right to buy does not apply to properties that are held by the landlord on tenancies from the Crown or where there is a demolition notice in place regarding the particular property.
How do you apply for the right to buy?
A tenant who wishes to apply for the right to buy can make an application on a prescribed form which will be sent to the landlord. This form is called the RTB 1 form.
Upon receiving the right to buy application form from the tenant, the landlord will usually carry out checks to see if the tenant is eligible to apply for the right to buy. This will generally be done within a period of four weeks following which the landlord will inform the tenant whether he accepts the tenant’s application for the right to buy or refuses it. If the tenant is denied the application for a right to buy by the landlord, then the tenant has the right to challenge this decision in court.
If, however, the landlord has agreed with the tenant’s application for a right to buy, then the landlord has a further eight weeks to serve an offer notice on the tenant of a house and 12 weeks to send the offer notice to a tenant of a flat. The offer notice will generally set out what the tenant is being offered for example the description of the property, the price of the property, the amount of discount available to that tenant, the terms and conditions of the sale and any problems with the property that the landlord is aware of for example structural problems and service charges if any.
Upon receipt of the offer notice, the tenant can decide whether to accept the terms and conditions of the offer or have the offer redetermined by a valuer if they believe the price is too high. If the tenant wants to proceed with redetermination, they will need to inform their landlord within three months of receiving the landlord’s offer notice and also the valuer’s decision will be a binding decision. If the tenant is, however, happy with the offer notice and ready to proceed, the tenant will need to arrange their mortgage if they need one and instruct a solicitor to deal with the purchase.
There are different discounts available for houses and flats, as well as depending where they are in
The maximum discount level for a house is 35% for a public sector tenant for 3 years. Once they have been a tenant for 5 years it will go up by 1% for every extra year. For example, if they have been a tenant for 10 years, they will have a discount of 40%. There is a maximum discount of 70%, or £77,900 across England and £103,900 in London Boroughs.
The maximum discount level for a flat is 50% for a public sector tenant for 3 years. Once they have been a tenant for 5 years it will go up by 2% for every extra year. The maximum discount is 70% or £77,900 across England and £103,900 in London Boroughs.
What is in the lease?
A Right to Buy lease under the Act will look like most other leases and will contain covenants and rights granted to the leaseholder in a form familiar with Leasehold Practitioners. Unlike most other leases the essential covenants and terms of the lease are imposed under the provisions of the Housing Act 1985.
Ground rent: must not exceed £10 per year for the whole term.
Lease term: the lease term is 125 years.
The commencement date for all leases in a building may start on the same date.
Right to buy Extension (England)
Right to Buy was extended to tenants in Housing associations. This funds the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant.
There was an agreement reached between the Government and National Housing Federation (NHF) to implement the right to buy extension on a voluntary basis. This was introduced in 2016.
If you need more information about the Right to Buy, please contact us and we will be happy to give you advice that is specific to your needs.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.