Flats in England are commonly leasehold, particularly where larger housing developments are concerned. It is less common for houses to be leasehold properties, but it is nonetheless possible. If you purchase a leasehold property, your current council (the freeholder) retains responsibility for the maintenance of the building and its communal areas, both internally and externally.
Mortgage eligibility on leasehold property
Your eligibility for a mortgage could be affected by the type of property you currently live in. There are lenders who refuse to offer mortgages on flats in high-rise developments, for example. If you are planning on applying for a mortgage, it is therefore worth bearing in mind how the type of property you live in could affect your eligibility. Rather than applying directly, it’s advisable to seek expert advice and support to know where you stand.
Purchasing a leasehold property means committing yourself to certain ongoing responsibilities and costs, which may not have applied when you are a tenant. Service and maintenance charges may be payable, in order to support the upkeep of the building and its surroundings. If you buy a flat, for example, you’ll make a contribution to the cleanliness and upkeep of hallways, stairs, elevators, gardens, pathways and so on.
Important Note: buyers who purchase leasehold properties are exempt from unexpected costs for the first five years. All regular service charges you are liable for must be clearly specified in the Section 125 offer letter you receive. If you are concerned or unsure about your service charge and liabilities, seek independent advice to understand your rights and obligations.
Owning a leasehold property often means seeking permission from the freeholder to make major alterations and adjustments to your home. All such information should be clearly communicated in your lease.
For more information or to discuss the specifics of purchasing a Right to Buy leasehold property in more detail, book your obligation-free consultation with UK Property Finance today.
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.