Last reviewed on 10th October 2023 by Martin Alexander (Mortgage Advisor)
Right to Buy is a popular scheme that’s helped many tenants become homeowners. Getting a mortgage while using the scheme can be difficult because not all lenders accept Right to Buy as part of their criteria.
This guide will explain whether you’re eligible to use the Right to Buy scheme and how to get a mortgage while doing so.
- What is Right to Buy?
- Do I qualify for Right to Buy?
- How much discount can I get?
- Can I use my discount towards a Right to Buy mortgage?
- Which mortgage lenders accept Right to Buy?
- Can I get a Right to Buy mortgage with my partner?
- Will I lose my discount if I sell the property?
- Alternatives to a Right to Buy mortgage
What is Right to Buy?
Right to Buy is a government scheme that allows you to buy your council home at a large discount. In fact, your discount can be used towards your mortgage deposit, so you’ll need little or no deposit to become a homeowner. Discounts will vary and depend on the valuation and location of your home.
The scheme was introduced in 1980 and has since become a popular way for tenants to buy a home.
Do I qualify for Right to Buy?
You may qualify for Right to Buy if:
- You’ve been a public sector tenant for at least three years
- The property you rent is your only or main home
- The property is self-contained
- You’re free from significant debt and don’t have any possession orders against you
You don’t have to live in the same property for three years in a row. There’s a similar scheme for housing association tenants called Right to Acquire, which could be suitable if you’re not eligible.
How much discount can I get?
The discount on a Right to Buy home depends on factors such as:
- The time you’ve been a public sector tenant – You’ll get a 35% discount if you’ve been with a public sector landlord for three years. This increases by 1% a year after five years and can reach a maximum of 70%.
- The type of home you’re buying – If you’re buying a flat, you’ll get a discount of 50% after three years and 2% after five years.
- The value and location of the property – The maximum discount is £96,000 across England, but for homes in London, the maximum discount is £127,900.
You can use this Right to Buy calculator to give you an idea of the discount you’re likely to get.
Can I use my discount towards a Right to Buy mortgage?
The biggest advantage of Right to Buy is that you’re able to use the discount as a deposit for your mortgage. For instance, a 30% discount could be used as a 30% deposit, meaning you’ll only need a mortgage for the remaining 70%. Not all lenders will allow this, and other lenders won’t accept borrowers using the scheme.
You’ll still need to pay fees such as mortgage fees and legal fees for your conveyancing. That said, the savings you make from the deposit could more than compensate for this.
Which mortgage lenders accept Right to Buy?
The lenders that accept Right to Buy include:
- Santander – Applicants must be already living in the home and have their Right to Buy application approved.
- Skipton – Will accept applicants who are using the discount as their deposit.
- Darlington – Acceptable but only up to 80% LTV.
- Reliance Bank – Will accept the scheme up to 90% of the market value.
- Tipton – Acceptable and will also allow you to spend part of the discount on home improvements.
It’s important to be cautious when approaching lenders without an advisor. There are many other lenders that accept the scheme and might offer better rates at the time of your application.
Surprisingly, there are lenders that don’t accept Right to Buy as part of their criteria. For instance, HSBC and Aldermore don’t accept the scheme.
Can I get a Right to Buy mortgage with my partner?
Under certain circumstances, you can get a joint mortgage using the Right to Buy scheme. Additional buyers who are non-family members need to have lived with you for at least one year or be joint tenants with you. This also needs to be displayed on your tenancy agreement.
You can add up to three family members to your mortgage. Each member needs to have lived with you for at least one year and won’t need to be on the tenancy.
Will I lose my discount if I sell the property?
If you sell your Right to Buy home within five years, you may have to pay back some or all of the discount. The amount of discount you’ll have to repay depends on how long you’ve owned the property:
- 100% in the first year
- 80% in the second year
- 60% in the third year
- 40% in the fourth year
- 20% in the fifth year
If you sell your Right to Buy home within ten years, you must initially offer it to your previous landlord or another council landlord. If no purchase is made within eight weeks, you can sell the property on the open market.
Alternatives to a Right to Buy mortgage
If you don’t qualify for the scheme, there are other government schemes to consider:
- Right to Acquire
- Shared Ownership
You can also speak to an advisor if you’re unsure of which scheme to use. There are many other ways to get help with your mortgage without using a government scheme. We’ll then look at your situation to find a suitable solution to getting a mortgage.
About the author
Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.