Right to Buy Mortgages: Explained


If you currently live in a council house or flat owned by a landlord, you may be able to buy your home at a discounted price. 

In this guide, we’ll discuss who is eligible and how the scheme works.

Key Points:

  • Right to Buy Mortgages are specifically designed for council tenants
  • The scheme was first introduced in 1980s and is still just as popular
  • The scheme allows you to buy your house or flat off your landlord for a discounted rate 

What is the Right to Buy mortgage scheme?

The Right to Buy mortgage scheme is a government scheme that allows you to buy your home at a substantial discounted price if you’re a council tenant. 

The policy was first introduced in the 1980s and remains just as popular to this day. 

What are the criteria for a Right to Buy mortgage?

To qualify for a Right to Buy mortgage, you must fit the following criteria:

  • You have been a council or housing association tenant for at least 3 years 
  • The property is your primary or only residence 
  • You don’t have any serious debt problems, such as bankruptcy
  • You don’t have any outstanding possession orders against you
  • Your home isn’t due to be demolished 

How does a mortgage work with Right to Buy?

Right to Buy mortgages work exactly the same as a typical residential mortgage. However, when you have a Right to Buy mortgage, you have the option to buy your home off your landlord. Your home will be given a market valuation and the discount is calculated based on that value. 

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

To apply for a Right to Buy mortgage, you will need to fill in a RTB1 Right to Buy application form and send it to your landlord. 

Your landlord must reply within 4 weeks and if they refuse the application, they must explain why. 

If the answer is yes, then they will need to send an offer letter called Section 125 Notice. This will set out the terms and conditions of the sale including:

  • A description of the property
  • The purchase price after discount 
  • Any structural defects that are known about 
  • Estimated service charges if you’re buying a flat or a leasehold house 

You will have 12 weeks to decide whether you’d like to buy your home or not, or you can pull out of the purchase and continue renting. 

How much is the Right to Buy discount?

The discount for Right to Buy mortgages depends on whether you live in a flat or house. 

If you live in a house, you’re eligible for a 35% discount after your three years of tenancy. After 5 years, the discount will increase by 1% for each extra year, up to a maximum discount of 70%. 

If you live in a flat, you are eligible for a 50% discount after three years of tenancy. After 5 years, the discount increases by 2% for each extra year. Again this increases to a maximum discount of 70%.

Can you use your Right to Buy discount as a mortgage deposit?

Yes, you can use your Right to Buy discount as a mortgage deposit, meaning that you don’t have to worry about saving for one. 

Most popular lenders will accept Right to Buy discounts as a deposit, but there are a few who won’t. Instead, some will ask you to have a saved deposit or have one alongside the discount. 

If you are able to use your discount as your deposit, you will still need to have some savings available to buy your council home. You will have to pay for some mortgage fees upfront, such as survey and conveyancer costs.

Pros and cons of Right to Buy mortgages

The Right to Buy scheme has a number of pros and cons that you should take into consideration before you dive straight into the process. 

Pros of Right to Buy mortgages:

  • It provides an affordable option for people who may not be able to get on the property ladder otherwise.
  • After paying rent for extended periods of time, it gives tenants something to show for the financial commitment.
  • It helps future generations with regards to housing since you will be able to hand your home down to your children one day.
  • It gives tenants a choice about their housing and their long-term living arrangements.

Cons of Right to Buy mortgages:

  • There is no guarantee that you will be able to buy your rented home, or that the sale price would be affordable to you.
  • It can create council housing shortages since many homes are being sold and not enough new ones are being built.
  • Some suggest the scheme offers short term solutions to long term problems since affordable housing is an issue that needs to be addressed by the government.

FAQs about Right to Buy Mortgages

Can you buy any council house with a Right to Buy mortgage?

No, you cannot buy any council house with a Right to Buy Mortgage, you can only buy the house or flat that you have been living in. 

Can you use Right to Buy if you are a housing association tenant?

No, you cannot use Right to Buy if you’re a housing association tenant, but you can use Right to Acquire instead. 

Right to Acquire is a similar scheme open to tenants of housing associations and you will usually be able to take advantage of mortgages designed for Right to Buy. 

Can you sell a Right to Buy home?

Yes, you can sell your Right to Buy home, but there are a few conditions that you must follow. 

If you sell your home within 10 years of buying it, you must either:

  • Offer it first to your old landlord 
  • Offer it to another landlord in the area

If you sell your house within the first 5 years of buying it, you will have to pay back some or all of the discount you got. However, you may not have to pay back the discount if you transfer ownership to a member of your family.

About the author 

The Barlow Irvin Team

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