Right to Buy
Mortgage Scheme

Right-to-buy mortgages work almost the same way as any other form of mortgage. With the right-to-buy mortgage, you can buy your council home or another house (under the public sector or housing associations) that you currently rent through the “Right-to-Buy Scheme scheme.” When utilizing the right-to-buy scheme, you will have the same mortgage options as any other borrower and will be assessed precisely the same way. The amount you can borrow and the associated interest rate will depend on the initial deposit you can provide and other factors like your current income and credit history.

When buying your council home under the Right to Buy scheme, you will find it helpful to seek advice from professional mortgage advisers. As experienced mortgage advisors, Credas Financial can explain the process when applying for this scheme, lead you through each step with the parties involved, and outline the legalities you will encounter. They always try to mould their advice to suit your circumstances and help you make the right decision.

Note: As a dedicated accountancy firm in the UK, we prioritize financial well-being. While we do not directly offer mortgage services, we collaborate with trusted professionals. We proudly recommend Credas Financial as our preferred mortgage advisor. Their expertise aligns seamlessly with our commitment to client satisfaction. Please note that our role is solely that of an introducer; we do not provide mortgage services directly. Clients are encouraged to assess Credas Financial’s services independently. We aim to facilitate informed decisions, fostering a comprehensive financial experience for our valued clients.

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What is the
Right to Buy Scheme?

A right to buy scheme enables most tenants of public sector in England (council or other housing associations) to buy their home that they are currently renting, at a discounted rate than the prevailing market price.

Other schemes related to the right to buy are available in Wales, Northern Ireland, and Scotland, but the rules may differ slightly. The right-to-buy scheme gained popularity in the late 20th century, but specific changes by the government, which reduced the discount rate and limited the availability:- made the eligibility criteria stricter and turned the scheme unattractive. Later changes in the terms and conditions in 2013 and 2015 made it more appealing to individuals.

The Right-to-Buy scheme is now widely available to public-sector tenants, including councils, housing associations, and NHS trusts. The government also reduced the qualifying tenancy period to buy the home – now three years rather than five years. The money from public-sector house sales is reinvested to acquire more homes for public-sector rents.

Right to Buy Discount

You get a discount on the house’s market value if you are eligible to apply for the Right-to-Buy scheme. The maximum discount you can avail is £84,600 throughout England, except in London boroughs where it is £112,800. In April, it increases each year concerning the consumer price index (CPI). The value of the discount depends on:

  • The time you have been a tenant with a public sector landlord
  • Type of property you want to buy–a house or a flat
  • Value of the property

You must pay some or your entire discount claimed if you sell the home within five years. You may get a lower discount if you already used the scheme in the past.

For Houses

  • You will be eligible for a 35% discount if you have been a public-sector tenant between 3 and 5 years.
  • If you have been a tenant for more than five years, the discount will increase by an extra 1% for each additional year you have been a tenant, up to a maximum of 70%. However, the maximum discount is £84,600 across England (£112,800 in London boroughs).

For Flats

  • You can claim a 50% discount if you have been a public-sector tenant for 3 to 5 years.
  • If you have been renting the house for more than five years, the discount will be increased by 2% for each extra year you have been a tenant, up to a maximum of 70%. The higher limit is the same as above.

The discount will be lower if the landlord has spent money on the maintenance or construction of your home:

  • In the last 10 years – if the landlord constructed or acquired your home before 2 April 2012
  • In the last 15 years – if the landlord acquired your home after 2 April 2012, or if you are buying the house via “Preserved Right to Buy.”
  • You cannot get any discount if the landlord has spent more money than the current value of the home.

Preserved Right to Buy

If the council previously owned your home, then they sold it to another authority just like the Housing Association, while you were living in it, you continue to have a Right to buy your home under the scheme called “Preserved Right to Buy”.

Applying for the Right-to-Buy Scheme

You can apply for Right-to-Buy Mortgage by sending a formal application form to your landlord, who will then respond by putting forward an offer; you can choose to reject or accept the offer according to the circumstances. The process is outlined below:

  • Fill in the Right-to-Buy application form (RTB1) online and send it to your landlord by a registered delivery process to keep a record.
  • The landlord must respond within 4 weeks (or 8 weeks if the tenancy period is less than 3 years). If they accept the application and agree to sell the property, they must get it valued by a professional surveyor. If the landlord rejects the application, they must give a valid reason.
  • After that, your landlord has a period of 8 weeks in case of freehold property and 12 weeks for leasehold property to send you an offer. This offer should detail the following:
      • The price they think you should pay for the property
      • How this price was brought out
      • Your right to buy a discount and how it was worked out
      • The description of the property and price of land included, if any
      • Estimated service charges, if any (for flats or maisonette) for the first five years
      • Are there any known problems with the structure of the property
  • After you get the landlord’s offer, you have 12 weeks to tell the landlord you want to buy. If you do not, the landlord will send you a reminder. After receiving the reminder, you have 28 days to decide; otherwise, the landlord can drop your application.
  • If you think the landlord has overvalued the property, you can ask them for an independent valuation within 3 weeks. A district surveyor from HMRC will then visit the property and bring out the estimated worth of the property; you have 12 weeks to accept the valuation or pull out of the sale.
  • At this time, you may also need a professional to arrange a survey and apply for the right mortgage and loan that you will need to finance the purchase of the property.

As independent mortgage brokers, Credas Financial not only help you source the right mortgage for you and helps with the application and making a plan by perceiving the future circumstances. They also recommend seeking legal advice where necessary. They can also help you frame your application so that your finances stand you in good stead and enhance the possibility of obtaining a mortgage.

Right-to-Buy Mortgage with a Partner

The right-to-buy scheme may appear to be a golden opportunity to buy a home at a discounted rate. But you may choose to buy your home with your partner simply because you wish it to be purchased this way or you cannot afford it.

Most lenders usually want to see that “the named persons on the mortgage will be the same as mentioned on the right-to-buy scheme and ultimately the property title”, but this does not necessarily need to be the case.

It is still possible to arrange the mortgage in joint names if you want to when the right-to-buy scheme is in one name only. The terms and conditions may vary depending on the lender but can be arranged so the partner will work the same as a guarantor.

If you want to dive into the details of such a mortgage to explore the opportunities for you, please get in touch with Credas Financial. They will understand your requirements and circumstances and guide you to choose the best option.

Joint application for Right to Buy Scheme

You can also apply for the Right to Buy Scheme in joint names with the following:

  • Someone who is a joint tenant with you
  • Up to 3 family members whom you have been living with for the past 12 months (if they share your tenancy or not)

Right to Buy Mortgage for a Retired Person

Most people can get a Right to Buy mortgage, even if they are retired. Retired is a comprehensive term and does not entirely describe the state of a person, but it can be assumed that they may be someone of a mature age. Some lenders refuse to provide you with a mortgage facility because age can be a factor. But most lenders are flexible enough to consider other factors besides age based on the mortgage’s affordability to you.

Everyone’s circumstances are unique, but there are fair chances that you can get a Right-to-Buy mortgage even if you are retired. The level of discount that you will be entitled to vary directly with the time you have been a tenant in your council home or housing association property – up to the maximum discount limit.

Right to Buy Mortgage Being a Self-Employed

Most self-employed people think they will have difficulty obtaining a mortgage because the lenders see them as too high a risk. Being self-employed, you may need to change your perception if you think the same.

You can avail if the chance has arisen to buy the council home you are currently renting under the right-to-buy Scheme and get the mortgage for this purpose. A self-employed person’s perceived difficulty in obtaining a mortgage is usually unforeseen, but most self-employed applicants will be assessed as any other.

As the number of people running their businesses has increased significantly, the attitude of lenders towards self-employed people has also changed over the years. Affordability is the critical factor in getting a mortgage. The lenders will happily provide mortgages to the self-employed applicants, knowing they can afford the required amount.

Right-to-Buy Mortgage Specialists

When exploring financial products, it is always worth seeking professional advice before deciding. Credas Financial is an experienced mortgage broker and knows how lenders can put people off by suspecting their suitability. At the same time, they also understand how the Right to buy discounts can make the mortgage much more accessible. They will try to find the right lender and the best deal for you according to your circumstances.

Credas Financial have access to dozens of mainstream lenders and hundreds of mortgage products. They understand how each lender assesses the applicants and, most importantly, their criteria to determine whether you can afford the mortgage. The experts at Credas Financial will help you find the best mortgage deal for your financial circumstances. Even if you have a poor credit history, do not exclude them from obtaining the mortgage; they will pave your way through getting the right mortgage.

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    Leeds: 94 Street Lane, LS8 2AL
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    Leeds: 94 Street Lane, Leeds
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    London: Suite 2462, Unit 3A,34-35 Hatton Garden,London, EC1N 8DX
    Bradford: 22 Muirhead Drive, Bradford, BD4 0HJ
    OUR LOCATIONSWhere to find us
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    GET IN TOUCHCare Accountancy Social Links
    Taking seamless key performance indicators offline to maximise the long tail.

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