Right to Buy discount slashed in budget

The Right to Buy discount for council house tenants has been slashed by Rachel Reeves in her first budget. That means North East house buyers planning to purchase their social housing home need to act quickly to receive a higher discount.

From 21 November, the Right to Buy discount will be just £22,000 – a cut of more than 78% compared to the current rate. 

Maximum Right to Buy discounts were originally £102,400 for anyone wishing to buy their council or social housing property outside London. Within the capital, the highest level of discount was £136,400.

But under the new rules announced in the autumn budget, maximum discounts will now differ depending on the region from 21 November. In the North East, the discount has been slashed to £22,000 – making it the lowest discount outside of London.

Applications for Right to Buy received before 21 November 2024 will receive the current discounts if you’re eligible. Anyone applying after that date will receive the new discount.

What is Right to Buy?

The Right to Buy scheme helps eligible council and housing association tenants in England buy their property. It was introduced in the 1980s to help people who rent social housing get a foot on the property ladder. 

It has been popular, with latest figures showing sales of more than 2 million properties since its introduction.

To qualify, you need to have been a public sector tenant for three to five years. You don’t need to have been living in the same property for that period. Eligibility also depends on whether:

• The property is a self-contained council or housing association home
• It is your only or main home
• You are a secure tenant
• You have no legal issues with debt

If you don’t want to buy alone, it is possible to make a joint application under the scheme.

Right to Buy is only available in England as it ended in Wales in 2019 and Scotland in 2016.

How is the discount calculated?

• Your discount depends on a number of factors including:
• How long you have been a tenant with any public sector landlord
• The type of property you’re buying (house or flat)
• The value of the property

Council house

Under current rules, you must have been a tenant in the public sector for between 3 and 5 years you get a 35% discount. For 6 years plus, you add 1% a year up to 70% or the maximum cash limit, depending on whichever is lowest.

Council flat

If you have been a public sector tenant in a council flat for between 3 to 5 years you’ll get a 50% discount. For more than 6 years, you add 2% per year up to 70% cash or the maximum discount.

Remember that if you sell your Right to Buy property within 5 years, you will have to pay back some or all of your discount. If you sell within 10 years, you must offer your old landlord or another social landlord at the market price before putting it on the market.

Right to Buy mortgages

If you need a Right to Buy mortgage, the affordability criteria is no different to other mortgage applicants. Your income and expenditure is assessed and you will need to pass the lender’s credit check. 

If you have no income from employment or self-employment you are unlikely to get a mortgage. Some types benefits are taken into account when calculating mortgage affordability. But housing benefit isn’t.

Securing a Right to Buy mortgage

If you would like help to secure a mortgage for your social housing property, you can speak to our team today.

Your home may be repossessed if you do not keep up repayments on your mortgage