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Home ownership service - right to buy

Right to Buy

• Changes to the Right to Buy from 18 January 2005
• Who has the Right to Buy?
• Valuations and Discounts
• Once you have received your valuation
• Right to request revaluation
• Selling your property

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Changes to the Right to Buy

The following changes came into effect on any applications received by the Council on or after 18 January 2005.

Before 18 January 2005 anyone who has bought their house under the Right to Buy scheme, or Rent to Mortgage, must pay back all or part of the discount allowed if they re-sell within the first three years. For all applications made on or after 18 January 2005 this period is extended to five years.

The amount to be repaid will no longer be based on the discount given. Instead the amount to be repaid will be based on the price of the property when re-sold. For example if the discount allowed on a Right to Buy purchase was £20,000 and the original valuation was £100,000, the discount was 20%. If the property is re-sold within five years and the price has risen to £120,000, the amount to be repaid will be based on 20% of £120,000, i.e. £24,000. Similarly if property prices have fallen and on re-sale the property is only worth £80,000, the amount to be repaid will be 20% of £80,000, i.e. £16,000.

• During the first year - the entire discount is repaid
• During the second year - four-fifths of the discount is repaid
• During the third year - three-fifths of the discount is repaid
• During the fourth year - two-fifths of the discount is repaid
• During the fifth year - one-fifth of the discount is repaid
• After the fifth year - the property can be sold without any discount being repayable

If you do re-sell your property within the five year discount repayment period, any improvements you have made will be exempt from the re-sale value.

The Council will have discretion under certain exceptional circumstances whether or not to demand repayment of all or part discount.

Any deferred sale agreements will also be subject to repayment of the discount. Therefore any arrangement made whereby you buy your property with the intent of releasing the discount by agreeing to transfer ownership at the end of the discount repayment period will result in the whole of the discount being repayable.

If you wish to re-sell your property within ten years you must make an offer of first refusal to the former landlord, the Council.

Some applications are denied the Right to Buy due to the property being suitable for elderly persons. Any appeal by an Applicant which previously went to the Secretary of State will now be referred to the local Residential Property Tribunal Service.

The Council will be able to suspend completion on Right to Buy applications if it intends demolishing the property within five years and it has served an initial Demolition Notice.

Any properties scheduled for demolition within the next 24 months will be excluded from the Right to Buy and any pending Right to Buy applications extinguished, provided the Council has served a final Demolition Order and followed a prescribed notification process.

Previously the Council could only serve a Notice to Complete 12 months after the Offer Notice. This period is shortened to three months. Therefore, once you receive an Offer Notice you have a period of three months to complete the sale. Once the period of three months expires you will be sent a Notice giving you a further eight weeks to complete. If the sale has not completed within this time the application will be withdrawn. The Council retains discretion to extend the period of completion under exceptional circumstances. If you do not respond to accept the price offer within three months the Council will send you a reminder giving you a further 28 days to reply. If you do not reply your application will lapse.

The Rent to Mortgage scheme ended 17 July 2005.

Another change made to the Right to Buy is the qualifying period. Before 18 January 2005 you had to be a public sector Tenant for at least two years and be a Secure Tenant at the time of the application. This period is extended to five years. However, this will only be applicable to anyone who begins a brand new tenancy on or after 18 January 2005 and does not come directly from another public sector tenancy.

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Who has the Right to Buy?

You have the Right to Buy if you have spent at least two years as a public sector Tenant and:-

• Your secure tenancy was in existence before 18 January 2005, or
• You were a public sector Tenant before 18 January 2005 (and you have been a public sector Tenant continuously since that time).

For anyone else, you do not have the Right to Buy until you have spent at least five years as a public sector Tenant.

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Valuations and Discounts

Properties are valued at current market rate.

The Council will cover the cost of this valuation.

You will receive a discount on this value, the amount will be dependent on your qualifying period. This is the time you have spent, in total, as a public sector Tenant or in accommodation provided by the Armed Forces.

You may include time spent with different Landlords at various addresses and the dates do not have to follow one another. If you took on a tenancy from your parents, you can include the years lived there from as early as your sixteenth birthday.

If you are buying jointly with someone else who has a longer qualifying period than you, you will get their higher qualifying discount.

If you were a secure Tenant before 18 January 2005 you will need two years as a public sector Tenant in order to qualify for the Right to Buy. The discount available to you after two years is:-

• 32% for houses, plus 1% more discount for each extra full year (up to a 60% maximum)
• 44% for flats, plus 2% more discount for each full extra year (up to a 70% maximum)

The five year rule only applies to new or non-continuous tenancies created on or after 18 January 2005:-

• 35% for houses, plus 1% more discount for each extra full year (up to a 60% maximum)
• 50% for flats, plus 2% more discount for each full extra year (up to a 70% maximum)

But whatever percentage discount you are eligible for it cannot be greater than the maximum discount for the City of Durham, which is £22,000.

If you have previously bought another Council property, any discount you got then will usually be deducted from the discount that you get when you buy again.

Please take care when filling in your application form as it is a legal document and all the information must be correct and entered in the correct section. Ensure that you input all necessary information as this could affect the amount of discount you get.

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Once you have received your valuation

Once the Offer Notice is sent to you, (this will state the price the property was valued at, your discount and the price at which the council is willing to sell you the property) you need to decide whether to withdraw from the Right to Buy or continue with your purchase.

If you decide to withdraw there is no penalty for doing so and you are free to re-apply in the future if you so wish.

If you decide to continue with the purchase you will need to let us know in writing. You will also need to arrange your own finance for the purchase, i.e. a mortgage and we recommend you enlist the help of a Solicitor.

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Right to request revaluation

If you are unhappy with the valuation of your property you have a right to obtain an independent valuation from the District Valuer. In order to do so you must write to the Director of Legal and Administration Services within three months from the date of your Office Notice requesting a re-determination of the value. Upon receipt of your request the District Valuer will be instructed and a further valuation will be carried out following which a further Offer Notice will be sent to you.

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Selling your property

You can sell your home whenever you like.

However, if you applied prior to 18 January 2005 and you sell within three years of purchasing it you will normally have to repay some or all of the discount you received.

If you sell:-

• During the first year - the entire discount is repaid
• During the second year - two-thirds of the discount is repaid
• During the third year - one-third of the discount is repaid
• After the third year - the property can be sold without any discount being repayable

If you applied on or after 18 January 2005 and you sell within the first five years of buying your home the discount you would have to repay is as follows:-

If you sell:-

• During the first year - the entire discount is repaid
• During the second year - four-fifths of the discount is repaid
• During the third year - three-fifths of the discount is repaid
• During the fourth year - two-fifths of the discount is repaid
• During the fifth year - one-fifth of the discount is repaid
• After the fifth year - the property can be sold without any discount being repayable

The amount of discount to be repaid if you sell within five years of purchasing will be a percentage of the re-sale value of the property disregarding the value of any improvements.

Right of first refusal

If you purchase your home under the Right to Buy scheme on or after 18 January 2005 and you wish to sell within the first ten years you will be required to offer it to either your former Landlord or their successor at full value.

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More Information

A full guide to Your Right to Buy Your home is available on the Office of the Deputy Prime Minister's website. If the home that you are thinking of buying is a flat you will find the booklet Thinking of buying a Council Flat on the Office of the Deputy Prime Minister's website.

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Other pages you may find useful

• Housing - improvement and repairs loans (PID 858)
• Home purchase grants (PID 158)