The Right to Buy for Secure Council Tenants
Introduction
The Right to Buy scheme was introduced in 1980. It allows certain secure tenants in council housing to buy their home at a discount which is based upon the location of the property and the length of time the tenant has been a tenant of the local authority or a housing association.
There have been a number of changes to the Right to Buy regulations since 1980 and the most recent changes came into force in 2005.
This information is for tenants of St Albans District Council about what your rights and responsibilities are in relation to the right to buy.
Over the 25 years since the Right to Buy was introduced St Albans District Council has sold a number of houses and flats, houses are normally sold on a freehold basis, with flats and maisonettes being sold on long leases.
1. Do you have the Right to Buy?
Not all secure tenants do have the Right to Buy. In the St Albans District those who do not have the Right to Buy are:
a) Secure tenants living in homes suitable for occupation by the elderly taking into account location, size, design, heating system and some other features
b) Secure tenants living in homes which were let to them or the previous tenant for occupation by a person aged 60 or over and which were first let before 1st January 1990
c) Homes which are due to be demolished
d) Retirement housing (also called sheltered housing)
e) Homes which the council has leased from a third party and which the council does not own
f) Almshouses
g) Temporary accommodation for the homeless
h) Introductory Tenants
In order to qualify for the Right to Buy you must have been a tenant of a council or a housing association for 2 years (if your tenancy started before 18th January 2005) or 5 years if your tenancy started after 18th January 2005.
In addition, you will not be allowed to buy your home if the council has a court order for possession of your home or if you are an undischarged bankrupt, have a bankruptcy petition pending or have made an arrangement with creditors and still have money outstanding.
2. How is your home valued?
When you make an application to buy your home, the details are passed to a local Valuer acting on behalf of the council who will arrange to visit and assess the value of your home. He will not take into account any improvements which you have carried out. You will receive details of the value of your home with the Section 125 Notice which the Council will send you following your application. If you do not agree with the valuation, you have the right to request a redetermination. This will be carried out by the District Valuer who is independent of the Council.
3. Will you be entitled to a discount?
The maximum discount available in St Albans is £34,000. The discount to which you are entitled depends upon the time you have been a tenant of either a council or housing association.
A) If you were a tenant before 18th January 2005 and are buying a house the discount is assessed as follows:
After 2 years as a secure tenant the discount is 32% with an additional 1% for each extra year you have been a tenant up to the maximum of £34,000
If you were a tenant before 18th January 2005 and are buying a flat, the discount is 44% after 2 years and 2% for each subsequent year up to a limit of 70%, with the maximum discount is limited to £34,000 in cash terms.
B) If you became a tenant after 18th January 2005 then the discount available for you after 5 years is 35% for houses and 50% for flats. If you are buying a house you are eligible for an additional 1% discount each year up to a maximum of 60% and if you are buying a flat you are eligible for an additional 2% discount each year up to a maximum of 70%. Again the maximum discount in cash terms is £34,000.
The discount may be reduced if your home has recently been purchased or refurbished by the Council. In this case, the discount cannot bring the price below the actual cost of purchase or refurbishment.
If you have previously bought under the Right to Buy and received a discount, the discount you are entitled to will be reduce by the amount of discount you received the previous time you purchased a property under the Right to Buy
4. Will you have to repay the discount?
There are some circumstances under which you may have to repay the discount
If you applied to buy your home before 18th January 2005 and sell within 3 years of the purchase then you will have to repay any discount as follows:
In the first year you will have to repay all the discount
In the second year you will have to repay two thirds of the discount
In the third year you will have to repay one third of the discount
You will only have to repay the discount or percentage of the actual discount you received
If you applied to buy your home after the 18th January 2005 different rules apply:
If you sell within one year the whole discount has to be repaid
If you sell within 2 years four fifths of the discount has to be repaid
If you sell within 3 years three fifths of the discount has to be repaid
If you sell within 4 years two fifths of the discount has to be repaid
If you sell within 5 years one fifth of the discount has to be repaid
Also, repayment is based on the resale value of the property (disregarding any improvements you have made) not just a percentage of the actual discount you received.
5. Selling the property on the open market
If you purchased your home under the Right to Buy scheme after 18th January 2005 you must give the right of first refusal to the Council (or another social landlord in the area as nominated by the Council) if you decide to sell your property. If the Council does decide to purchase the property will be bought at full market value which will be agreed by you and the Council (assuming no discount is repayable). If both parties are unable to reach an agreement on the price, the District Valuer will determine the price. If your offer has not been accepted by the Council or it's nominated agent within 8 weeks then you are free to sell the property on the open market.
6. How much is it likely to cost to buy your home?
In addition to the actual costs of your home there are other costs associated with buying a property. These include:-
The cost of a survey. A survey will be required by the organisation which lends you the money to buy your home. If you do not need a mortgage then it is still advisable to have a survey to identify any current or future maintenance and structural problems with the property
Legal Costs - you will need to appoint a solicitor. You can ask them in advance for estimated costs.
Stamp Duty may be payable - your solicitor should be able to advise you of how much this will be
Life Insurance - in case anything happens to you or anyone else who contributes toward the mortgage
Mortgage Payment Protection Insurance - in case you are unable to work or other reasons prevent you paying your mortgage
Council Tax - although you may be entitled to council tax benefit depending upon your circumstances
In addition you should be aware that once you own your home you are responsible for arranging your own building insurance and are liable for the costs of any repairs and maintenance.
If you are buying a flat or leasehold property then the council will have some responsibilities for maintenance and repairs of external and communal parts of the property but you will be charged for these once a year. In addition you may have to pay service charges e.g. for electricity and lighting to common parts, caretaking and grounds maintenance. You will also have to pay Ground Rent and contribute toward the building insurance. These are all charged on an annual basis.
If you buy your home with a mortgage you should be sure that you can afford to make the mortgage repayments. Housing Benefit will not cover mortgage payments but if you lose your job or your circumstances change, you may be entitled to Income Support to help cover the interest element of the mortgage. This is not payable until 39 weeks after you have claimed. If your mortgage company has to write to you about any arrears then they will make a charge for any letters they write or additional statements they have to send.
If your home is repossessed due to mortgage arrears and you are evicted then you may not be entitled to council housing once you are homeless.
7. What next?
If you want to go ahead and make enquiries about buying your home then you need to contact the Legal Department on 01727 819506 for a Right to Buy Claim form. This form is also available from the Council's main reception Complete the form carefully as the information you give will be used to decide if you have the right to buy and how much discount you will receive.
Within 4 weeks the council will send you a Notice informing you whether you have the right to buy. If you don't have the right to buy the reasons will be given at this stage.
If you do have the right to buy a Section 125 Notice will be sent within 8 weeks of sending out the Notice accepting your right to buy if you are buying a house and within 12 weeks if you are buying a flat or maisonette. The Section 125 Notice will describe the property, the purchase price, details of any known structural defects, estimates of the service and any other charges and the terms and conditions of the sale.
It is important that you also have your own survey of the property carried out and appoint a solicitor to represent your interests in the sale.
If there are any delays with the sale or return of documents by the council then you may be entitled to a reduction in the purchase price. Details of the timescales for return of documents and Notices by the Council can be found in the leaflet issued by the Department for Communities and Local Government which is available from the Council.
If there are any problems with the sale which you are unable to resolve directly with the Council, you can get further information about your rights from the Citizens Advice Bureau, your solicitor or through the Department for Communities and Local Government.
If you have any other queries about the Right to Buy or want further information then please contact your Management Officer who can arrange for more information to be sent to you.
More information about your right to buy your home can be found in the Government booklet “Your Right To Buy Your Home”. This is a guide for tenants of councils and registered social landlords including housing associations. Click here to find the booklet.