At Avalon Mortgages, we help people with a broad range of mortgages including Right to Buy. But what is this scheme and how does it work? Here’s our guide.
What is the Right to Buy scheme?
Right to Buy is a government scheme. It enables most council tenants to buy their council home at a discount. You can apply to buy your council home if:
- it’s self-contained.
- you’re a secure tenant.
- it’s your only or main home.
- you’ve had a public sector landlord (for instance, a council, housing association or NHS trust) for three years (it doesn’t have to be three years in a row).
Please note, the rules may differ for Wales, Scotland and Northern Ireland.
Discounts and how they affect mortgage lending
If you qualify for Right to Buy, you can get a discount on the market value of your home.
The discount is based on:
- where you live
- the value of your home
- the type of property you’re buying: flat or house
- how long you’ve been a tenant with a public sector landlord
You might get a smaller discount if you’ve used Right to Buy in the past.
In many cases, the Right to Buy discount acts like a deposit.
That means:
- you may not need a cash deposit
- your loan-to-value looks lower on paper
- lender options can open up earlier than expected
But it’s not treated exactly the same as cash. The property still needs to stand up at full market value, and lenders will evaluate it on that basis.
How Right to Buy can vary
While the basic government rules for Right to Buy are the same across England, certain considerations can vary from council to council. For example, the maximum discount you can expect in the District of Watford is £16,000, while in the Eastern region, it’s £34,000.
Right to Buy and Help to Buy: what’s the difference?
By now, you should have a good idea of ‘Right to Buy’. But what about ‘Help to Buy’? Although the two phrases are similar, they are very different schemes. Help to Buy was designed to help people onto the property ladder without them having to save a large deposit. Instead, buyers were expected to save a 5% deposit and the government would give them an equity loan up to 20% of the cost of their new home, meaning they would have a 25% deposit for a new home plus the assistance of a Help to Buy mortgage broker. The catch? Buyers were restricted to new build properties only. Help to Buy closed in 2023.
How a mortgage brokers can help
Remember that if you approach a lender directly, they can only discuss their own mortgage products with you. On the other hand, our experts at Avalon Mortgages have access to a range of lenders and mortgages, giving you the best chance of finding the best deal.
If you’re thinking ‘I need a mortgage broker near me’, get in touch with our team here in Hemel Hempstead.
