Right to Buy Affordability
The costs of purchasing a property (and home ownership in general) are not to be underestimated. There are enormous advantages to owning your own home, but you first need to ensure you can afford to do so.
Under the government’s Right to Buy scheme, enormous discounts are available for qualifying social housing tenants. Nevertheless, you still need to consider the extent to which you can cover the remaining balance. Exploring mortgage types and options at the earliest possible stage comes highly recommended. Particularly if you are on a limited income or have an imperfect credit score, expert support could prove invaluable.
Calculating the Costs of RTB
An online mortgage calculator can be great for getting an idea of affordability and eligibility. In addition, you can also use our exclusive Right to Buy calculator to work out how much you could save on your home.
Comparing the market to find the best possible mortgage deal is essential. As is considering the additional costs of purchasing a home, which include arrangement fees, solicitor’s fees, stamp duty and so on. It may also be necessary to come up with a sizeable deposit, in order to qualify for a mortgage.
If you’re concerned about your credit history, you may be limited to subprime mortgage products – call our experts for information.
As beneficial as homeownership can be, you need to carefully consider the following:
- You will no longer be eligible for housing benefit as a property owner
- If your circumstances change, you may struggle to keep up with your repayments
- Failing to keep up with your repayments could result in repossession
- Vague quotations can be costly – always demand concrete up-front quotes
- The value of your home could change positively or negatively at any time
- Your financial status will affect your eligibility for a mortgage
Right to Buy can significantly reduce the costs of homeownership, but can also bring additional complications into the matter. We therefore strongly suggest seeking independent expert advice at the earliest possible stage, in order to both simplify the purchase process and ensure you get the best possible deal.
Comparing Homeowner Costs And Tenant Costs
Most would agree that home ownership is a preferable alternative to a tenancy. However, owning your own home isn’t without its own unique costs and responsibilities. It is important to gain a better indication of how the costs of homeownership compare to those of your current tenancy.
It’s important to consider as many regular outgoings as possible – travel and transportation costs, utility bills, clothes, groceries, leisure activities etc.
If you have any questions or concerns regarding the potential costs of homeownership, we’re here to help. Our expert advisers have extensive experience in all aspects of Right to Buy property purchases.
Discuss the available options or to get your application underway, contact a member of the team at UK Property Finance for an obligation-free consultation.
For more information or to discuss your requirements in more detail, contact a member of the team at UK Property Finance.
Right to Buy is an affordable housing scheme open exclusively to council property tenants (and some housing association tenants). Qualifying tenants upon meeting specified length-of-tenancy requirements are automatically given the right to purchase their home, with discounts available of up to £82,800, increasing to £110,500 for qualifying properties in London.
Lower discounts of £24,000 and £8,000 are available in Northern Ireland and Wales respectively.
The UK government introduced the Right to Buy scheme to help public-sector tenants purchase their homes with potentially huge discounts from their actual market value. Right to Buy was introduced by the UK Government in 1980, though initial property discounts were relatively low - up to £16,000 maximum. Discount amounts were subsequently increased on an annual basis to reflect inflation and are now significantly more generous, opening the door to potential home ownership for more tenants than ever before.
It is already possible to qualify under the Right to Buy scheme to purchase a housing association property. However, there are specific terms and conditions governing the program. Tenants occupying ex-council houses who lived in the property at the time it was transferred to a new landlord have what’s known as ‘Preserved Right to Buy’.
Otherwise, Right to Buy may qualify under a secondary ‘Right to Acquire’ scheme, for which discounts of £9,000 up to £16,000 are available. Contact your landlord or local housing association for more information.
There is an eligibility quiz on the official government Right to Buy portal. Check that out and answer a few simple questions to determine whether you may be eligible for an enormous discount on your home’s current market value.
Housing Association Tenants - Recent changes have affected eligibility for the Right to Buy scheme for occupants of housing association properties. Find out more and determine how much you could save by purchasing your home through Right to Buy.
UK Property Finance has extensive experience and expertise in all aspects of Right to Buy applications for council and housing association tenants alike.
If you purchase your property under the Right to Buy, you are perfectly entitled to let it out to tenants. However, you must inform your local council of your new address - i.e. where you will live while renting out your property.
Upon receipt of your application to purchase your property under the Right to Buy, your landlord is typically obliged to reply with a decision within four weeks. This is sometimes increased to eight weeks, depending on your length of residency in the property. A complete offer notification including the value of the property, the discount you are eligible for and the resulting purchase price for your home will be sent within no more than 8 weeks for a house, or 12 weeks for a leasehold property.
If you choose to go ahead, it will then be your responsibility to organise a mortgage and the general administrative/legal side of the purchase process. From start to finish, it typically takes at least 3 to 6 months to purchase a property under Right to Buy, although it can be quicker.
Not necessarily, as many lenders accept the discount on the property’s value as the deposit. Depending on the lender, you may therefore not need to provide any deposit. Nevertheless, this is determined on a case by case basis. In some instances, your deposit obligations will be exactly the same as if you were purchasing a property through the normal channels.
Right to Buy mortgage lenders in the UK require deposits of anything from 0% up to 20%, which must be paid before the mortgage completes. If you have concerns as to your ability to cover the necessary mortgage, contact a member of the team at UK Property Finance to discuss the alternative options.
The typical maximum discount available on a property in England is £82,800, increasing to £110,500 for qualifying properties in London. It is also possible to qualify for a discount under the Right to Buy scheme in Northern Ireland and Wales, where the maximum discounts available are £24,000 and £8,000 respectively.
Anyone interested in purchasing a property outside England should consult with the relevant government website using the links below:
Possibly however the deposit you need to pay will be determined entirely by the size and nature of the mortgage you need to pay for your home. There are various different types of mortgages available, along with alternative secured lending options and general property finance packages. To discuss the available options and assess your suitability, contact a member of the team at UK Property Finance anytime.
Stamp duty is payable on all properties in the United Kingdom, including those purchased under the Right to Buy scheme. Stamp duty is only payable when purchasing a property with a value in excess of £125,000. Most property purchases are subject to the usual 3% stamp duty, which is payable at the time of the property purchase by the individual (or individuals) buying the home.
The maximum discount currently available under the Right to Buy scheme in England is £82,800, increasing to £110,500 for qualifying properties in London. Discount amounts are revised and updated every April, in line with inflation,
For more information on any of the above issues or to discuss your eligibility for a Right to Buy discount in more detail, contact a member of the team at UK Property Finance today.