Are you living in council housing for a while and are finally deciding to buy it? If so, realise that you can buy it at a much lower rate! Right to Buy is a scheme that allows individuals who live in council housing to buy the housing at a much lower price. In essence, you get to buy the home at a discount. However, the amount that is being discounted will vary from one person to another, taking into account factors like the type of property, the property's value, and more.
If you are here to learn more about the Right to Buy when purchasing a council home, you're in the right place. Today, we'll talk about Right to Buy—the requirements to be eligible, the fees involved, how to sell the property, and more.
Who Can Buy Their Council House?
There are a few requirements to meet to be eligible in purchasing a council property. First, the individual has to have had a public sector landlord for a minimum of three years. Second, the council home the tenant is living in must be their only and primary home. Third, the individual isn't sharing their facilities with anyone outside their household. Fourth, a legal contract between the occupant and the landlord must stand. Fifth and finally, the individual must be based in England. If living in Scotland or Wales, the Right to Buy does not apply. If living in Northern Ireland, a different scheme exists entirely.
What Kind of Discounts Can I Expect?
Note that the discount you get depends on many factors, some of which we mentioned in the introduction. However, there are some general numbers you can fall on.
If you have been a public sector tenant for at least three to five years in council housing, you get around a 35% discount. Any year after the five-year mark, you get one percent extra in discount with up to 70% discount total. Either this or you get a discount of £84,600 across England and £112,800 in London, the one you get being the lower of the two. For example, if you get a 65% discount that totals around £150,000, but you live in London, you will only get a £112,800 discount.
On the other hand, if you live in a council flat for around three to five years, you gain a 50% discount right away. After that, you get a 2% increase in a discount for every year that passes for up to 70%. The £84,600 across England and £112,800 in London discount will also apply here, and you receive whichever is lower.
What Fees Are Expected in the Purchase?
When going through with a Right to Buy purchase, you will need to understand the fees that entail. This is because the fees do add to the total cost of purchasing the council home. Understanding these fees is an important activity to ensure that you do not run into any nasty financial surprises. That said, there are generally two main fees you need to be concerned about: solicitor fees and mortgage arrangements.
Right to Buy solicitor fees are fees you pay to a solicitor you work with for conveyancing purposes. The fee that you pay can differ from one solicitor to another, depending on location and required services. Many of these conveyancing solicitors will also take care of some of your legal needs, and so do expect to cover such fees as well.
That said, when looking for a Right to Buy solicitor, make sure to look for a company that offers you free quotes. Not only is this a good sign that the company are experts at what they do, but free quotes also allow you to gain insights on the prices you need to cover without additional costs.
With Right to Buy mortgages, these are only available to those that live in a council home. The fees here will revolve around the usual checks you typically face with any other mortgages, and so you can expect the typical fees revolving around mortgages when opting for Right to Buy mortgages. Keep in mind that you will need to think about the deposit as well. Some lenders can accept the discount as a deposit, while others won't. Be sure to talk to them carefully to understand what you need to do to satisfy their deposit requirements.
How Does One Sell a Right to Buy Property?
At some point, you might consider selling your Right to Buy property. When that happens, there are a few factors to consider that can affect your selling efforts.
For example, if you have owned the property for around five to ten years, you will need to sell it back to the landlord. Only if they do not want it back are you able to sell it to the market. Now, as to the price of the Right to Buy property, you must sell it at the full market price at which you and the landlord have agreed on. If it isn't something you or the landlord can agree on, then an independent valuer must come and present a value of the property.
If you are interested in selling the home after owning it for less than five years, you will need to pay a portion or all the discount you received. The percentage of the discount you have to cover will depend on how long you've owned it. In the second year, you have to pay 80% of the discount, dropping by 20% each year until the fifth year in which you only pay 20%. Keep in mind that the actual amount will also depend on the home's value when you finally sell it.
The Right to Buy scheme has presented plenty of opportunities for those living in areas that offer the scheme the chance to own the council home they rely on to live a good life. Thanks to the discounts presented, those facing financial hardships are given the opportunity to own the house they were previously renting. In addition, financial solutions such as Right to Buy mortgages makes this endeavour even more possible, giving everyone the home they deserve to live in.
With all of that in mind, if you are interested in purchasing the council housing you're currently living in, do a little research about Right to Buy in your area. This way, you know what to expect when making the most out of the discount, and it will also allow you to take note of any requirement or criteria you have to meet to be eligible for the Right to Buy scheme. While effortful, thoroughly understanding your privileges with Right to Buy will help you plan your finances appropriately to finally own the council home you've been living in for so long.
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