Right to Buy Mortgages

You need a special mortgage to let a property

In a Nutshell...

• The right to buy means you can buy your home from a local authority, a non-charitable housing association or a housing action trust.
• Usually a ‘right to buy’ mortgage will cost less than on the open market because as a tenant you can get a discount on the loan.
• To qualify for a Right-to-buy mortgage, you must be the legal tenant of the property you wish to purchase and / or have been a tenant of this or another ‘right to buy’ landlord for at least two years.
• You may be entitled to a discount off the purchase price of your home. The amount of discount depends on how long you have been tenant in the Council House or other ‘right to buy&’ landlord, and the kind of housing you are living in.
• Monthly mortgage payments are often lower than rental costs.

What is it?

Under the 1981 Housing Act, most Council Tenants have the ‘Right to Buy’ their home. The right to buy means you can buy your home from a local authority, a non-charitable housing association or a housing action trust. Usually a ‘right to buy’ mortgage will cost less than on the open market because as a tenant you can get a discount on the loan.

Initially, very few lenders offered such mortgages but it has become much more common although still a specialist product. These days it is possible not only to get a mortgage to cover the purchase price, but also home improvements. So for example, you might get a 50% discount when buying your home (meaning it's worth twice as much as you pay for it) but you might be eligible to borrow 70% of the open market value to renovate the property.

There can still be problems when buying your council home depending on its construction and your circumstances, and it's best to seek our free advice to find out what's available to you.

Who qualifies?

The Right To Buy scheme enables tenants to buy their homes at a discount price, providing they've been living in their home for two years and meet the other qualification criteria. The RTB scheme is open to virtually any secure tenant who can afford to buy, with the exception of dwellings occupied in connection with their employment and housing specially provided for the elderly and (in certain cases) the disabled.

To qualify for a Right to buy Mortgage Loan you must:

1. Be the legal tenant of the property you want to buy.
2. Have been a tenant of this Council or another ‘right to buy’ landlord for at least two years. You might be entitled to a discount off the purchase price of your home. The amount of discount depends on how long you have been tenant in the Council House or other ‘right to buy’ landlord, and the kind of housing you are living in.

You can now apply for a Council Right-to-buy Mortgage even if you have a history of bad credit such as arrears, defaults or county court judgements. Loans and mortgages can be arranged for you even if you're self-employed (with or without accounts), on income benefit, or retired. People with a clean credit history can also apply.

Costs and charges

There are two options available under the right to buy:

1. You can buy your home by paying the full purchase price at once with discounts ranging from 32% to 70% dependent on how many years you have been a tenant, up to the cash discount limit for your area.
   - Houses: The discount after two years is 32% with an additional 1% for every extra year up to a maximum of 60%.
   - Flats: The discount after two years is 44% with an additional 2% for every extra year up to a maximum of 70%.
   For anyone who applies after 10 February 1999, the maximum cash limit on discount is:
   - £38,000 if you live in London or the South East
   - £34,000 in the Eastern Region
   - £30,000 in the South-West
   - £26,000 in the North-West or the West Midlands
   - £24,000 in Wales, the East Midlands or Yorkshire and the Humber
   - £22,000 in the North-East
2. You can use the Rent To Mortgage scheme if you want to buy your home, but can't afford to pay for it all at once.

This schemes benefit the tenant because monthly mortgage payments are often lower than rental costs.

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