Right to Buy mortgages

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What is Right to Buy?

Right to Buy is a government scheme that lets you buy your home at a substantial discount if you’re a council tenant.

The policy was introduced by Margaret Thatcher in the 1980s and remains popular.

You might even be able to use your discount as a mortgage deposit so you can buy your home with less savings.

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Am I eligible for Right to Buy?

You qualify for Right to Buy if:

  • You’ve been a council or housing association tenant for at least three years, although not always for a continuous three years
  • The property is your only or main home
  • You don’t live in sheltered housing for elderly or disabled people
  • You don’t have serious debt problems, like bankruptcy
  • You don’t have any outstanding possession orders against you
  • Your home isn’t due to be demolished

Housing association tenants are eligible for a similar scheme called Right to Acquire but it does have slightly different eligibility and rules.

What’s the Right to Buy discount?

Your home will be given a market valuation and the Right to Buy discount is calculated based on that value.

The Right to Buy discount varies depending on where in the country you live, how long you’ve been a council tenant and whether your home is a house or a flat.

To find out exactly what discount you might be eligible for, you can use the government’s Right to Buy discount calculator.

Once you have an idea of your discount you’ll be able to start planning what type of mortgage you might be eligible for.

How much is the discount?

It varies depending on whether you live in a house or a flat.

It applies to the total time you’ve been a public-sector tenant, not just the time you’ve lived in your current home.

Houses

You’re eligible for a 35% discount after three years’ tenancy. After five years, the discount increases by 1% for each extra year, up to a maximum discount of 70%.

Flats

You’re eligible for a 50% discount after three years’ tenancy. After five years’ tenancy, the discount increases by 2% for each extra year you have been a public-sector tenant, up to a maximum discount of 70%.

Maximum discounts apply whether you’re buying a house or a flat - check the government’s Right to Buy site for the latest limits.

Using your Right to Buy discount as a mortgage deposit

One of the big advantages of Right to Buy is that you don’t have to save for a deposit because you can use your Right to Buy discount instead.

Most lenders will accept a Right to Buy discount as a deposit - but not all of them will. Some will ask that you have saved your own deposit in addition to or instead of the discount.

Even if you use your discount as a deposit, you’ll still need to have some savings to buy your council home. You’ll have to pay for any up-front mortgage fees, as well as survey and conveyancing costs. You should save and budget at least a few thousand pounds for these expenses.

Speak to a mortgage adviser who can help find a lender that accepts the discount deal and also offers the other features that’ll meet your needs.[1]

Affordability criteria for Right to Buy mortgages

If you need a mortgage to buy your council home you’ll be subject to the same mortgage affordability criteria as any other mortgage applicant.

Your income and expenditure will be assessed and you’ll have to pass the lender’s credit check.

If you’re self-employed you’ll probably be asked for several years’ worth of accounts to prove your income.

If you have no income from employment or self-employment you’re unlikely to be able to get a mortgage, no matter how big your Right to Buy discount.

Some types of benefits can be taken into account when calculating mortgage affordability, but housing benefit won’t be. That’s because housing benefit can’t be used to pay a mortgage, so it’ll stop once your mortgage completes, even though you haven’t moved house.

Selling your Right to Buy property

If you sell within five years you’ll have to pay back some or all of the discount.

If you sell your home within 10 years, you must first offer it to your old landlord or another social landlord at the market price before putting it on the open market.

This could make buying your next home slower and more expensive, as well as reducing the amount of equity you have to buy your next home.

Think about how long you want to stay in your council home before you commit to buying it.

Alternatives to a Right to Buy mortgage

If you qualify for Right to Buy but you’ve decided it isn’t right for you, there are other government schemes that can help you buy a home with a smaller deposit, such as Help to Buy or shared ownership.

There are also low-deposit mortgages available for buying homes without the restrictions of these schemes.

Frequently asked questions

No - you can only buy the house or flat you already live in so you won’t get to choose where you live.

No, but Right to Acquire is a similar scheme open to housing association tenants and you can usually take advantage of mortgages designed for Right to Buy as well.

See also

View all mortgage guides

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

PLEASE NOTE: THE FCA DOES NOT REGULATE MOST BUY TO LET MORTGAGES

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