right to buy uk 2013.pdf

7/27/2019 Right to buy UK 2013.pdf

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Council or Housing Association tenants

YourRight

to Buy

own?

yourhome

your

to makeWant

Find out if this could be theright time to consider buying



3

Now might be your best opportunity to become ahomeowner. You may be eligible or a discount o upto £75,000 (or up to £100,000 i you live in London)o the price o your property.

Your home could be a valuable asset or you and youramily and an investment or the uture. This could beyour rst important step on the property ladder.

Home ownership provides a special sense o pride.It would give you more reedom to make the changesyou want to make to your home, and to move whenand where you want to – or example, to take up anew job in another area, or take the next step onthe property ladder.

Buying your home is a big decision or you andyour amily. The responsibilities, costs and nancialcommitments that ownership brings need to bethought about careully, so you should always seekimpartial advice beore buying.

With the opportunity or bigger discounts availablenow, this could be the perect time to decide i it’sthe right choice or you.

This booklet sets out the main inormation you needto get you started, the questions you should ask, howto take the next steps, and useul contacts or ree,unbiased advice and inormation.

Why you mightlike to buy

Contents

Why you might like to buy? 3

Do you have the Right to Buy? 4

What discount could you get? 6

Can you aord it? 9

Other costs o buying a home 10

Working out the costs 14-15

Step by step guide 16-17

Guide to application orm 18-19

Useul contacts 20

YourRightto Buy



5

You could be eligible ora Right to Buy discount i

You are a council tenant

OR

You were a council tenant whenyour home was transerredto your current landlord

I you were living in your home when it was transerred rom the council to anotherlandlord, like a housing association, you may have a ‘Preserved’ Right to Buy.

I so, you could be eligible to buy your home in the same way as i you were stilla council tenant. I not, you may still be able to buy your home at a discount.

You have been a public sectortenant or at least 5 years

I you have been a tenant or 5 or more years (it doesn’t have to be ve years ina row) you could qualiy to buy the home you currently live in. It must be your onlyor main home.

You don’t live in sheltered housingor other housing particularly suitableor elderly or disabled people

Your home is not due to bedemolished

There are some homes that you may not be able to buy under the scheme.Check this out with your landlord i you are not sure.

You don’t have any legalproblems with debt

This could include i you are an un-discharged bankrupt, have a bankruptcy petitionpending against you, or have obtained a debt relie order.

You don’t have any outstandingpossession orders

You cannot buy your home i a court makes a possession order which says that youmust leave your home (usually made because you have not paid your rent, or havebreached the terms o your tenancy agreement in some other way).

I you can answer ‘yes’ to thesestatements, you are probably eligiblebut your landlord will need to conrmthis. See ‘Right to Buy – step by stepguide’ fowchart on page 16.

You don’t have to do it alone

You can make a joint application. So i you’re eligible, you might be able to buyyour home with:• Someone who shares your tenancy.• Your spouse or civil partner.• Up to 3 amily members who’ve lived with you or the past 12 months.

They don’t have to be on your tenancy agreement but it must be their main home.

Do youhave theRight to Buy?



7

House

I you live in a house, you could get adiscount o between 35% and 60% o itsvalue, up to a maximum o £75,000 (or£100,000 in London), whichever is lower.

Discounts start at 35% or 5 years’ tenancy.Add 1% or each extra year o tenancy(so 10 years tenancy = 40% discount,20 years = 50%).

Buying a houseExample 1Current house value £120,000

Years as a tenant 10 years

Eligible discount(35% + 1% or eachyear over 5 years)

40%

Discount value £48,000

Price you pay or house(£120,000 less £48,000)

£72,000

Buying a houseExample 2Current house value £230,000


Eligible discount(35% + 15%)

50%

Discount value(50% discount in this

example is above the£75,000 limit, so thediscount will be themaximum £75,000)

£75,000

Price you pay or house(£230,000 less £75,000)

£155,000

The longer you have been a tenant, the bigger the discount you get o

the market value o your home, up to a maximum discount o £75,000

(£100,000 i you live in London).

Discount levels or houses and fats are dierent. All discounts start

at 5 years o eligible tenancy.

See our website or a handy Right to Buy Calculator. It’ll help you work out thediscount you could receive.

You could also check out local estate agents and property websites to get a roughidea o what your property could be worth.

Flat

I you live in a fat, you could get a discounto between 50% and 70% o its value,up to a maximum o £75,000 (or £100,000in London), whichever is lower.

Discounts start at 50% or 5 years’ tenancy.Add 2% or each extra year o tenancy(so 10 years tenancy = 60% discount,15 years = 70%).

You might get a slightly lower discount i you purchased through Right to Buy onanother home or i your landlord has spent some money on improving your home.

I you have made improvements to your home, make sure you inorm your landlord(as part o the application orm) so that they can refect this in the valuation,which may be slightly lower as a result.

What discount could you get?

You

may qualify

for an

even bigger

discount

Buying a fatExample 1Current fat value £100,000



60%

Discount value £60,000

Price you pay or fat(£100,000 less £60,000)

£40,000

Buying a fatExample 2 (London)Current fat value £270,000



60%

Discount value

(60% discount in thisexample is above the£100,000 limit, so thediscount will be themaximum £100,000)

£100,000

Price you pay or fat(£270,000 less £100,000)

£170,000



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Can you aord it?Home

ownership

comes

a

step

closer Mortgage or loan

You are likely to need a loan or mortgage,which you would pay back with interest,usually in monthly payments. The interestrate will be in the mortgage deal that youagree with your lender (usually a bank orbuilding society) and can change over time.

Remember that interest rates could go upor down in uture which will mean themoney you will pay back each month couldchange signicantly.

How much can you borrow?

This depends on your personalcircumstances, such as your income,your outgoings, whether you’re buyingalone or with someone else.

You agree with the lender how longyou need the mortgage or and whetheryou can aord the monthly payments.

When deciding the period your mortgagewill be paid over, remember that when you

retire this could aect your ability to aordmortgage repayments.

The type o property you live in can alsoaect whether you can get a mortgage– or example some lenders won’t lendmoney on a fat in a high-rise block.

Even i you don’t need a mortgage yoursel,it’s worth checking whether lenders arewilling to give mortgages on the typeo property you are buying. You maywant to sell in the uture to someonewho does need a mortgage.

For most people, buying a home is the biggest investment they will ever

make. It’s an exciting time, but there is a lot to think about.

You need to look at all the costs involved (not just mortgage repayments)

and work out i you can aord it not only now, but in the uture too,

when your circumstances may change. And bear in mind that house

prices could go down in uture as well as up.

It’s a good idea to look into the costs o home ownership as early

as possible, beore you get too ar into the Right to Buy process.

You are responsible or how you nance your Right to Buy – your

landlord can’t arrange this or you.

This section provides an overview o the costs as well as where you

can get more inormation and ree, unbiased advice. There’s a checklist

on pages 14 and 15 that can help get you started.



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Things

to consider

beforeyou buy

Other costs o buying a homeThere are some one-o costs when buying your home, as well as ongoing costs. Costsbelow are correct at time o publication and are only provided as a guide. See our‘useul contacts’ on page 20 or more inormation.

One-o costs

Mortgage advice

You may choose to get advice roman independent nancial adviser or

mortgage broker.

Costs vary and may be a set eeor percentage o the loan.

Survey

You may want to get an independentsurvey done. This will highlight anyproblems (such as repairs) you’ll needto know about beore you buy.

Costs can vary depending on the typeo survey. Typically they start at around£250 or a basic valuation survey.

Checklist• Shop around.• Get advice.• Check all the costs upront (the cheapest quote may not be the best one or you).• Check out careully anyone oering to help.

Finding the best option or you

There are dierent mortgage optionsavailable rom dierent lenders. Forexample, some will treat your Rightto Buy discount as your deposit, whileothers will not.

It’s worth shopping around to compare thedeals available to you, and get impartialadvice beore making up your mind. TheMoney Advice Service is a good place tostart – they provide ree, unbiased advice.

You could take a look at comparison sitesand online calculators to help you getan idea o costs. You could also talk to a

Legal ees

You will need to hire a solicitor or otherlicensed conveyancer or the legal aspects

o your purchase (searches, land registryees, deeds etc.).

Costs can vary. Typically £500-£750.

Stamp duty

This is a one-o tax you pay when youbuy a property. The amount is based on apercentage o the purchase price and variesaccording to the property value. Stamp dutydoes not apply to properties under a certainvalue (currently £125,000).

bank, building society, mortgage broker oran independent nancial adviser (IFA). Somebrokers and advisers charge or their services.Ask beore appointing them and whoeveryou speak to, make sure they are regulatedby the Financial Conduct Authority (FCA).

Many lenders will also charge a ee to setup a loan or mortgage. Make sure thatyou understand the terms and all the costsinvolved beore you commit to anything.

Check out careully any person orcompany oering to help you buy yourhome as some o them may charge a ee.

The company may be oering a dealwhich is ar better or them than or you.



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Ongoing costs

When you buy your home, you take onsome ongoing costs and responsibilitiesthat you might not have as a tenant.These include:

Maintenance and repairs

As a homeowner, your landlord will nolonger organise repairs to your home.You will need to organise and pay orthese yoursel. This could include electricaland plumbing jobs through to moreexpensive repairs such as a new boileror repairing your roo.

It’s a good idea to set aside some money

each month or maintenance and repairs.Be aware that you may need permissionor some changes (such as planningpermission or an extension) so checkbeore you get started.

Selling or transerringyour home later

Once you buy your home through Rightto Buy, you can sell it whenever you want.But there are some things you should beaware o.

I you sell within 10 years: you rst have to ask your ormer landlordi they want to buy your home back, atmarket value. I they say ‘no’ then youcan sell it on the open market.

In addition:

I you sell within 5 years:you will usually have to repay some or allo the Right to Buy discount – the amount

depends on the price you sell at and howlong you have been the owner.

This also applies i you agree to transerownership to somebody else.

I you live in a rural area: you may only be allowed to sell your hometo somebody who lives or works locally.Ask your landlord about this.

Checklist

• Check i you are buying a leaseholdproperty and look into the costs.

• Work out your monthly outgoings.Don’t orget to include all yourliving costs, such as ood, clothes etc.

• Set aside some money or repairs.

• Think about what you’ll do i thingschange in the uture.

• Fill out the table on pages 14 and 15.

Service charges when buying a fator leasehold house

Flats (and some houses) are leaseholdproperties. When you buy a leaseholdproperty, the reeholder (your currentlandlord) will still be responsible ormaintaining the building and thesurrounding area (communal areas)– as dened in your lease.

As a leaseholder, you will pay your share othese costs – known as the ‘service charge’.When major repairs and maintenance areneeded in your block or estate, you’ll haveto pay a share o the costs too.

This can be several thousands o poundsshould, or example, a new lit or newwindows be needed.

You are protected rom unexpected costsor the rst 5 years. When you buy, yourlandlord must give you an estimate o yourservice charges or this period (see step4 on page 17). They can only increase thisamount to take account o infation – eveni something unexpected needs doing.

Ater 5 years, the service charge can riseto refect actual costs. Your landlord mustconsult with you beore starting anymajor works. Beore you buy ask aboutany long-term plans or repairs, worksor improvements to your block o fatsor surrounding area.

Home improvements or leaseholders

You may need permission rom thereeholder (your current landlord) tomake certain changes to your property.This should be set out in your lease– check it careully with your solicitorbeore you sign it.

The same rules apply to all leases (whetherit’s a council or a private property).

Where to get help i you’re thinkingo buying a leasehold property

It’s worth talking to local leaseholders tolearn about their experience o servicecharges in your area.

Free inormation and advice is availablerom the Leasehold Advisory Service.You’ll nd their contact details on page 20.

Insurance

You may already have insurance or thecontents o your home. As a homeowneryou will also need to insure the building(i you are a leaseholder you will pay yourshare o this cost).

You may also want (or be required byyour lender) to get income protectionor lie insurance in case anything happensto you while you’re paying o yourmortgage or loan.

Other considerations

As a homeowner you will not be eligibleor housing benet.

Your home could be at risk i you aren’table to keep up your mortgage or loanpayments.



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Being a homeowner can bring manybenets, but it also brings importantresponsibilities. Use this section to help youwork out the costs, benets and drawbackso home ownership or you. Fill out thetable below to help you work out your

Advantages o buying

Possible drawbacks o buying

Advantages o renting

Possible drawbacks o renting

Summary

Working out the costs

One-o costs when you buy (see page 10 or details)

Legal ees £ Stamp duty £

Survey ees £ Other costs £

Total

Income Now (tenant) Homeowner

Wages £ £

Housing benet £ n/a

Other income (benets etc) £ £

Total £ £

Ongoing costs (monthly) Now (tenant) Homeowner

Mortgage repayments n/a £

Rent £ n/a

Council tax £ £

Utility bills(water, electricity, gas, telephone, etc)

£ £

Insurance (buildings and contents) £ Contents only £

Lie assurance and illness cover £ £

Internal upkeep/maintenance(repairs to heating system, DIY etc.) £ £

Major repairs / improvements n/a £

Service charges (i applicable) £ £

Other costs (general living expensessuch as ood, going out, clothes etc.)

£ £

Total £ £

Now (tenant) Homeowner

Total monthly income £ £

Less monthly outgoings £ £

Your money let over each month £ £The Money Advice Service has a range o tips and tools to help you budget and work outwhat you can aord. See page 20 or contact details.

current monthly outgoings as a tenant,and compare that with the costs o beinga homeowner. When working out whatyou can aord, it’s important to actor inall o your outgoings, such as ood, clothes,utility bills, phone, car etc.

Compare your outgoings to your household income.



17

6

Completethe purchaseOnce you’re happy with yourlandlord’s terms and havearranged how you will payor your home, carry on andcomplete your purchase.

It’s usually during this timethat you pay your stamp dutyetc. nalise the paperworkand sign the contract.

You are now a homeowner!

5

Over to you– mortgage,survey...and get adviceYou have up to 12 weeksto accept your landlord’soer. It’s during this timethat you’ll need to arrangea mortgage or loan, get asurvey and hire a solicitor.

Get independent nancialand legal advice (i youhaven’t already) and checkyou understand all the costsbeore you sign anything.

4

Receive an oerYour landlord then has up to8 weeks to send you an oernotice or a house or up to12 weeks or a fat. This oernotice, which is known as aS125 notice, sets out:

• their valuation o yourproperty*, your discount,the price you’ll pay.

• any structural problemsthey know about.

• any terms and conditions.

For leasehold properties only,the S125 oer notice will alsoinclude an estimate o the

service charges that you willneed to pay over the next5 years (see page 12).

* I you’re not happywith the valuationyou can appeal.

3

ConrmeligibilityYour landlord has up to 4weeks to reply conrmingwhether you have the Rightto Buy.

(or 8 weeks i you have beenwith your current landlordor less than 5 years).

I you’re eligible or the Right to Buy discount you could be on your way

to owning your home. Here are the six key steps you need to ollow.

2

Fill in anapplicationormAsk your landlord or anapplication orm (RTB1)or download one romour website at:

www.communities.gov.uk/righttobuy.

Fill it in and send it toyour landlord.*

* See pages 18 and 19 orinormation about thedetails you will need tohave to hand beore youll in your application orm.

1

Right to Buy – step by step guide

What to do i your landlord doesn’t meet the timescales

Buying a home can be a long process and can take several months. Your landlord must processyour Right to Buy application within certain timescales (shown in the diagram). I theydon’t meet these timescales or delay without reason, you could get a reductionin the sale price. Find out more about delay notices on www.communities.gov.uk/righttobuy

Check eligibility,work out thecosts and getadviceOnce you’ve checked youreligibility (see page 4) it’s agood idea to look into thecosts o home ownership asearly as possible, so you havean idea o what it might costand what you can aordbeore you get too ar intothe process.

Go to page 14 to get started.



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I you think you are eligible and eel ready to apply or the Right to Buy,

you need to ll out the RTB1 application orm.

You can download it at www.communities.gov.uk/righttobuy on

the ‘How to apply’ page or get one rom your landlord. Make sure

you have the ollowing inormation to hand beore you ll out

your application orm.

Part BThe tenant(s)

The ull names o everyone listed on yourtenancy agreement (or ‘rent book’)

For example RICK SMITH would probablybe RICHARD JAMES SMITH. Rememberto tick the boxes to say whether the

property is each tenant’s only or principalproperty, and i they wish to buy.On joint tenancies, not all tenantsmay wish to buy.

Questions to askyoursel beore you buy

Do I have the Right to Buy?

Beore you start this process use thechecklist on page 4 to see i you mighthave the Right to Buy.

Can I aord it?

Use the checklist on pages 14 and 15 towork out the costs, benets and possibledrawbacks o buying. It’s worth doing thisbeore you get too ar into the process.

Can I aord it i things changein the uture?

Remember that your home could be at riski you’re not able to keep up your mortgageor loan repayments. So work out yourbudget, don’t over-extend yourselnancially and make sure that you havesome savings set aside or a rainy day.

What are the benets and risks?

Owning a home can be a good investmentor the uture, and gives you more reedomto make your home your own. But makesure you’ve also considered the risks andresponsibilities.

Where can I get advice?

See page 20 or contact details oorganisations that can give ree andunbiased advice on buying your home.

See back ormore useul

contacts

Part DQualication and discount

Details o your currentand previous tenancies You will need dates, names o tenants,addresses and name o landlord oryour tenancies. This includes those oyour spouse/civil partner, those o your

ormer spouse/civil partner who youhave separated rom/ divorced, or whohas died, and parents who previouslyheld the tenancy.

Details o any other properties you havebought under the Right to Buy scheme,or at a discount through any otherGovernment scheme, or exampleRight to Acquire You do not need to give details oapplications, only purchases.

Guide to completing yourapplication orm (RTB1)

Part AThe property

The ull address o the propertyyou want to buy Remember to include the area whereyou live and the ull postcode.

The name o your landlordFor example Basildon Borough Council.

Part CFamily member(s)

The ull names o amily members whowish to share the Right to Buy with youThey must be a spouse, civil partneror wider amily members and over 18.Wider amily members must have alsolived in the property as their main homeor at least the last 12 months.

Part EPrevious discount(s)

Details o any discount previouslyreceived under the Right to BuyYou might get a slightly lowerdiscount i you have purchasedthrough Right to Buy on anotherhome. Include details o address othe property purchased, name olandlord and date o purchase.

Part FTenant’s improvements

Details o any improvements you havemade whilst living in the property The improvements may haveincreased the value o the property.I you list them in your application,the value o the improvements willnot be included in the valuation othe property so you don’t pay twice.

Part GSignatures

Signatures o all tenantsMake sure all tenants sign in thecorrect place. On page 13, the rst seto boxes are or amily members whoare not tenants but want to share theRight to Buy. The second set o boxesare or tenants who do not wish toshare the Right to Buy.

Once you’ve completed and signed the orm, send it to your landlord.



Where to get the advice you’ll need

Useful contactsBuying a home can be exciting butthere is a lot to think about. Yourlandlord can help you with part othe process, but you need to arrangeother parts (such as fnances) yoursel.

The Government works with a numbero organisations who provide ree and

unbiased advice and can help point youin the right direction.

To fnd out who your landlord is,look or contact details on a recentletter or newsletter.

Money advice

The Money Advice Service is anindependent organisation set upby government.

They provide ree impartial adviceon a range o fnancial matters.This includes tips and tools to helpyou budget, choose a mortgageand work out whether you canaord monthly repayments.

Telephone: 0300 500 5000

www.moneyadviceservice.org.uk

Buying a leasehold property

The Leasehold Advisory Service (LEASE)provides ree, unbiased advice onleasehold properties, including guidanceon service charges and ground rent

Telephone: 0207 383 9800

www.lease-advice.org

Legal matters

• For help in fnding a conveyancingsolicitor, contact The Law Society

Telephone: 020 7320 5650www.lawsociety.org.uk/fndasolicitor

• You can also fnd a licensed conveyancer atwww.conveyancer.org.uk

• For your local Citizens Advice Bureau visit

www.adviceguide.org.uk

Survey

Visit the Royal Institution o CharteredSurveyors (RICS) website:

• For guides visitwww.rics.org/useulguides

• To fnd a qualifed surveyor in your area

www.ricsfrms.com

Stamp duty

For inormation on stamp duty andthe latest rates go to:www.gov.uk/stamp-duty-land-tax-rates

General Right to Buy information

Visit the Government’s dedicated Right to Buywebsite, with eligibility quiz, discountscalculator, application orm and guidance,delay notices and urther inormation.www.communities.gov.uk/righttobuy

Not eligible for Right to Buy?

For inormation about other governmenthome ownership schemes visit Gov.uk at: www.

gov.uk/aordable-home-ownership-schemes

www communities gov uk/righttobuy20

Published by Department or Communities and Local Government. ©Crown copyright 2013. Product code 978-1-4098-3980-4.Printed in the UK, July 2013, on paper containing 50% recycled stock.

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