The Right to Buy was first introduced in 1980 and still allows most secure tenants to purchase their home at a price lower than the full market value. This page explains how you can apply for the right to buy and also gives you some important points to note when considering whether to purchase your home or not, especially in terms of repairs.
The council is able to offer free support and advice as part of this process. If you use a company to assist with your application they may charge you. Please tel: 01283 595795 to discuss further. Alternatively, the Government offers free and impartial advice on right to buy.
Before you decide to purchase your home it is important to remember that there are a lot of costs and new bills you will need to pay.
As part of the buying process you will have fees for solicitors, valuers and surveyors.
When you have bought your property you will have to consider mortgage repayments, service charges, building insurance and repairs and maintenance costs.
If you were in receipt of housing rent benefit you will no longer be able to claim this to pay your mortgage.
If you are a secure tenant and have held a public sector tenancy for three years you may be able to purchase the property that you live in through the Right to Buy.
The Right to Buy scheme gives tenants a discount on the market value of their home. The longer you have been a tenant, the more discount you get, up to the maximum limit set by the government each year. From 1 April 2015 the maximum discount is £77,900.
You must have been a public sector tenant for at least three years in order to qualify for the Right to Buy. If you live in a house, you can get a discount of 35 per cent for up to five years tenancy. For each extra year that you have been a tenant, you get another one per cent, up to a maximum of 70 per cent. If you live in a flat, you can get a discount of 50 per cent for up to five years as a tenant. For each extra year that you have been a tenant, you get another two per cent, up to a maximum of 70 per cent.
But, whatever percentage you are eligible for, your discount cannot be greater than £77,900. The maximum discounts will increase on 6 April each year if the Consumer Price Index increases. If the Index does not increase, the discount will remain the same.
The qualifying period for discount can include time spent in different homes and with different landlords. This doesn't have to be continuous, so long as it was a public sector tenancy. You may also be able to count a period when your husband, wife or civil partner was a public sector tenant or lived in housing provided by the armed forces. If you lived with your parents after the age of 16 and you later became the tenant of the same house or flat, you may be able to count that time too.
If you are buying jointly with someone who has a qualifying period longer than yours, you will get their higher rate of discount (subject to the £77,900 limit)
Your discount may be reduced by a special rule called the cost floor. This may apply if your home has recently been purchased or built by your landlord or he has spent money on repairing or maintaining it. Under the cost floor, the discount you receive must not reduce the price you pay below what has been spent on building, buying, repairing or maintaining it.
If the cost of works carried out over the 10 year period is greater than the market value of your home, you will not receive any discount. This period is 15 years if your home was built or acquired by your landlord after 2 April 2012.
If you are buying under the Preserved Right to Buy, the cost floor period is 15 years regardless of when it was build or acquired.
If you have bought your home under the Right to Buy, you can sell it whenever you like. But if you wish to sell within the discount repayment period specified below you will usually have to repay some or all of the discount.
If you sell within the first year of purchase, the whole discount will have to be repaid. Four fifths must be repaid if you sell in the second year, three fifths in the third year, two fifths in the fourth year and one fifth in the fifth year. After five years, you can sell without repaying any discount.
In addition, the amount of discount to be repaid if you sell within five years of purchase will be a percentage of the resale value of the property, disregarding the value of any improvement. For example, if your home was valued at £100,000 at the time you bought it from your landlord, and you received a discount of £20,000 that means that your discount was 20 per cent.
If your home is valued at £150,000 when you wish to sell it, and you want to sell within the second year of purchase, you will have to repay £150,000 x 20 per cent discount x 4/5 i.e. £24,000.
Certain shares or transfers are exempt from the requirement to repay discount, for example, transfers between certain family members. In addition, if you would face hardship by having to repay discount, and your circumstances justify it, your landlord can decide not to ask you to pay some or all of what you owe.
If in advance of your purchase, or within the discount repayment period, you enter into an agreement to transfer your property to a third party in the future, then this will trigger repayment of your discount. Discount repayment is triggered from the date that you enter into the agreement. So, for example, if you enter into such an agreement before you have bought the property or during the first year after buying, you will have to repay the full amount of discount you received.
If you have purchased under the Right to Buy scheme before, the amount of discount you got then will usually be deducted from your discount when you buy again.
If you purchase your home under the Right to Buy scheme and you wish to resell or dispose of it within 10 years, you will have to offer it first to either your former landlord or to another social landlord in your area at full market value. The market value must be agreed between the parties or, if they are unable to agree, will be determined by the district valuer (the government will pay the costs of employing a district value). If your offer has not been accepted within eight weeks, you will be free to sell the property on the open market.
If you submit an application to buy your property and you report a repair, a decision has to be made by the member of staff taking the repair on whether the repair should be carried out. Generally there is an obligation on the council to carry out wind and watertight repairs and maintain essential services. The following repairs come into this category:
Additionally the council is obliged to carry out all qualifying repairs under the tenant's right to repair as follows:
The council also has an obligation to carry out gas servicing on an annual basis until the date that the house is sold to the tenant.
If a tenant is elderly or vulnerable in any way, then the member of staff taking the repair may wish to refer to a senior member of staff for a decision on whether the repair should be done.
All of the above repairs will be subject to re-charging in the usual way if the tenant has caused damage.
When you have bought your home you will be responsible for costs of all repairs and maintenance, regardless of the condition of the property when you bought.
South Derbyshire District Council
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