Right to Buy your council house in the UK
The basic rules for the right to buy are as follows
- You can buy your home from the local authority If you have been a local authority tenant (present and previous addresses can be included) for a minimum of 2 years before 18th January 2005, or a minimum of 5 years after 18th January 2005…….
- If you were a tenant before 18th Jan 2005 you have the right to a discount which is capped from area to area, we will look at these later, and if you decide to sell your home in the first three years (pre-emption years) you must give a % of the discount back to your local authority. It works as follows in the first 12 months, the discount must be paid back in full, in the following 12 months 2/3rd s of the discount must be paid back to your local authority and in the final year 1/3rd of the discount must be paid back. Once the three years have expired you have no legal obligation to your local authority and if you decide to sell your home the money raised from the sale is yours!!!!!!!
- On the other hand if you decided to buy your council house from the local authority after the 18th Jan 2005 it’s a different ball game. The pre-emption period is extended from 3 years to 5 years and if you decided to sell your home in year 1 your would have to pay the council 1/5th of the profit, in the second year 2/5th and so on ….. Once the 5 years has expired you do not have to pay any of the discounts back but within the next 10 years from date of purchase if you decided to sell your home you must give the council the first option to buy the property back. They will have to pay the full market value of the property.
The process of applying to buy your council house
- First you will have to fill in an RTB1 (available to down load on our website) and send this to the council, they should reply within 4 weeks (RTB2) to say you have the right to buy
- From week four to week 12 (in real terms a further 8 weeks) the council will value your house and once they have the open market value they will decide how much discount you can have (remember this is capped in different regions)
- You will receive a Section -125 which basically says how much the property is worth (open market value), how much discount you are entitled to, and how much you can buy the property for.
Worked example in Leeds
OMV (open market value) £100,000.00
Full discount £26,000
You can buy the property for £74,000
If you are not happy with the valuation of the council valuation, you are entitled to appeal their valuation of the property. This is done by instructing a district valuer, they will re-value your home, their decision is final and we have had cases were the valuer has increased the council valuation of the property as well as decreased the councils valuation, so be careful speak to our advisers before you take this type of action.
Level of discounts
There is a limit to how much money you can get off the value of your property through Right to Buy. The maximum discounts available by region are:
- £16,000 in Wales
- £16,000 in London (unless your home is in Barking and Dagenham or Havering, where the maximum discount is £38,000)
- £22,000 in the North East of England
- £24,000 in the East Midlands, Yorkshire and the Humber
- £26,000 in the North West of England and the West Midlands
- £30,000 in the South West of England
- £34,000 in the East of England (unless your home is in Watford, where the maximum discount is £16,000)
In the South East of England, the maximum discount is £38,000, unless your home is in one of areas listed below. In these areas the maximum discount is £16,000:
- Epsom and Ewell
- Reigate and Banstead
- Tonbridge and Malling
- Vale of the White Horse
- West Berkshire
Which Mortgage Lenders will Lend on Right to Buy Properties
Not all lenders provide right to buy mortgages, but there are a number of lenders that will lend on their normal terms for right to buy mortgages. As well as this there are a number of rights to buy mortgage scheme especially designed for right to buy properties where there may be other issues. If you have bad credit or cannot prove all of your income there are still lenders available.
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