Right To Buy – The Facts

Chris Huntingford

The Housing Act 1980 transformed social housing by giving secure tenants the right to buy their homes at discounted prices. The discounts range from 35% to 60% for flats, and 50% to 70% for houses.

Right to buy – the facts

Secure tenants have the right to purchase their properties after five years, but this comes with restrictions. The tenant cannot sell the property within five years, subject to losing their discount.

If they do sell within five years, the amount of discount to be repaid is calculated according to the property’s value at the date of resale, so that the tenant does not make a windfall profit from rising property prices.

Tenants with an anti-social behaviour order have a limited right to purchase under the establishment of a ‘demoted tenancy’.

Abuses of the system

The right to buy has been amended since it was established, due to abuses of the system. For example, property speculators agreed with tenants that they would buy their properties under the right to buy scheme and then pay the tenant some of the discount they had received.

To try and stop property speculators cashing in on right to buy discounts, if there is a deferred agreement to resell the property to someone else, entered into before the right to buy is exercised or during the five-year period after purchase, this will trigger a repayment of the discount.

A social landlord also retains the right of first refusal to purchase the property for ten years after the purchase.

Previously right to buy had been extended to cover any property designed to be or converted to be occupied as a residence. However, this has now been overturned in a further effort to prevent abuses of the system. Now if a building is not in use as a residence when the application is made, it will not be accepted.

Right To BuyHow can Nelsons help?

Chris Huntingford is a Partner at Nelsons and heads our Residential Conveyancing team.

For more information on the subjects discussed in this article, please call 0800 0241 976 or contact us via our online form.

 

 

 

 

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