Right to buy
- Introduction
- Who has the Right to Buy?
- The Discount Rules
- Buying a Flat or Maisonette
- The Costs of Buying
- Right to Buy Procedure
- The Council’s Response
- Telling the Council what you want to do next
- Completing your purchase
- Exceptions to the Right to Buy
Introduction
Under the Right to Buy scheme, some tenants are able to buy their home at a price lower than the full market value. The length of time you have spent as a tenant entitles you to a discount on the purchase price of your home.
The Right to Buy scheme applies to people who hold secure tenancies. If you are not sure what this means or which tenancy applies in your case, please telephone the Council on 01322 343434 and ask for the Right to Buy & Leasehold Office, who will be able to advise you.
This leaflet is a summary of the law relating to the Right to Buy and is not intended to cover everything. If you wish to exercise your Right to Buy or you want to find out more about buying your home, please contact the Right to Buy & Leasehold Office on the telephone number stated above.
Dartford Borough Council recommends that you seek independent legal and financial advice about your individual circumstances before making any decisions about buying your home.
Things to consider before deciding to buy your home
Take time to consider whether buying your home is the right choice for you.
If you do exercise the Right to Buy, you will become responsible for all the costs of maintaining your home, including routine repairs, major structural repairs, and any improvements you make to it, and service charges if they are applicable.
- As an owner-occupier, you will not receive any housing benefit to help with your mortgage costs.
- If you are elderly and own your home, its value may be taken into account in assessing whether you have to pay the full cost of residential care.
The Government made some changes to the Right to Buy scheme which took effect on 18 January 2005:
- If you are a new tenant of the Council, the length of time you must be a tenant before being eligible to buy is 5 years;
- The discount repayment period is 5 years (this is the length of time you must keep your home without losing all or part of your discount when you sell);
- The amount of discount to be repaid if a property is resold within 5 years is a percentage of the value of the property when it is resold
Be suspicious if anyone tries to tell you that the Right to Buy is ending soon, or asks if they can buy your home on your behalf. Always check with Dartford Council staff before making any decisions or signing any papers to do with buying your home.
Some tenants have found themselves homeless after agreeing to such deals. You do not have to pay anything for the application forms to buy your home as these are available freely on request. Remember, if in doubt, check it out.
Who has the Right to Buy?
You may have the Right to Buy:
If your tenancy commenced before 18 January 2005 or you were a public sector tenant before that date, you can apply for the Right to Buy if you have spent at least 2 years as a tenant.
- If your tenancy commenced on or after 18 January 2005 or you became a public sector tenant on or after that date, you can apply for the Right to Buy after 5 years as a tenant.
- You will only be able to purchase under the scheme if your house or flat is your only home and is self-contained.
- Any land let together with your home (for example, gardens) will usually be treated as part of your home.
- You cannot buy your home if the Council obtains a possession order from the court which requires you to leave your home; or if you are an undischarged bankrupt; or if there is a bankruptcy petition pending against you, or if you have made an arrangement with creditors and you still owe them money.You cannot buy your home if you have a Demoted or Introductory tenancy agreement.
- Certain types of property cannot be bought under the Right to Buy and more details are set out later in this leaflet.
The Discount Rules
The Right to Buy scheme gives tenants a discount on the market value of their homes.The longer you have been a tenant, the more discount you get. The maximum discount available for Dartford Borough Council tenants is £38,000.
If you qualify for the Right to Buy, the discounts are shown below, using a house worth £75,000 as an example.
But, whatever percentage you are eligible for your discount cannot be greater than £38,000.
Qualifying period (years) Discount for houses Discount for flats/ maisonettes
2 32% – £24,000 44% – £33,000
5 35% – £26,250 50% – £37,500
10 40% – £30,000 60% – £38,000
15 45% – £33,750 70% – £38,000
20 50% – £37,500 70% – £38,000
25 55% – £38,000 70% – £38,000
30 60% – £38,000 70% – £38,000
Over 30 60% – £38,000 70% – £38,000
Repayment of Discount
If you have bought your home under the Right to Buy, you can sell it whenever you like. But if you sell within the ‘discount repayment’ period, you will usually have to repay some or the entire discount. The amount you repay will depend on when you made your application to buy.
If you applied for the Right to Buy before 18 January 2005 and sell within 3 years of buying your home, you will have to repay some or the entire discount. If you sell within the first year after your purchase, the whole of the discount must be repaid to the Council; two thirds must be repaid if you sell in the second year; and one third in the third year.
If you apply for the Right to Buy from 18 January 2005 onwards and sell within 5 years of buying your home, the amount of discount to be repaid will be a percentage of the resale value of the property, disregarding the value of any improvements.
If you sell within the first year of purchase, the whole discount will have to be repaid; four fifths must be repaid if you sell in the second year; three fifths in the third year; two fifths in the fourth year; and one fifth in the fifth year.
Certain sales are exempt from the requirement to repay discount, e.g. transfers between certain family members.
Buying a Flat or Maisonette
If you buy a flat or maisonette, you will be given a long lease (125 years) that allows you and your successors to live in it for that time,as Leaseholder.
The building will still be owned by the Council, who will be responsible for maintaining it and who are also responsible for any communal areas and shared facilities. The Council will charge you a proportion of the costs of any of the work it carries out on communal areas or shared facilities and this is called a Service Charge.
Service Charges
There are two kinds of service charges: annual charges for day-to-day maintenance and ‘major works’ service charges (this is usually a lump sum) when a lot of repair or refurbishment work is needed.
Some freeholders may also have to pay costs for the repair and maintenance of shared communal areas on an estate – for example, pathways, play areas and gardens.
The Costs of Buying
Buying your home is a major financial commitment. Apart from paying for the building itself, you will then have to maintain it. If you buy a flat on a long lease, you will also have to pay service charges.
You will be responsible for repaying your mortgage along with all the interest charges that are added to the loan, by making regular monthly payments to the mortgage company that lent you the money.
If you can’t keep up the repayments on your mortgage, the mortgage company may go to court and ask to take over your home. The council may not have to give you another tenancy if you lose your home in this way.
The amount you would have to borrow depends on: the full market value of your home; less- any discount you may be entitled to; less
- any cash you can put towards the purchase.
One Off Costs of Buying Your Home
You should employ a solicitor or a licensed conveyancer to look after the legal side of buying your home (often this costs £300 to £500). You should also arrange for a survey of your home (£250 to £600 or more if your home has any special problems).
If you take out a mortgage loan, you may have to pay for the cost of arranging it (arrangement fee, £100 to £250). You may also have to pay a valuation fee (average cost £200 to £300).
When a sale is completed, you must pay the Land Registry to register you as the new owner.
You may have to pay Stamp Duty, which is a tax that people pay when they become homeowners. Stamp Duty is worked out as a percentage of the price you pay for any property that is worth more than £120,000.
Regular costs
- Council tax, water and sewerage charges: You will have to pay these separately, straight to the water services company and to the Council.
- Utilities: Gas, electricity, TV licence and other utility bills will be your responsibility.
- Insurance: For example, buildings insurance, contents insurance, life assurance and mortgage payment protection insurance.
- Repair and maintenance: If your home is a house and you buy it, you will be responsible for the costs of all repairs and maintenance, regardless of the condition of the property when you bought it. If you are buying a flat on a long lease, you will also have to pay the Council’s service charges (see the separate section earlier in this leaflet).
Right to Buy Procedure
Start by asking the Council for the Right to Buy claim form (Form RTB1). The Council must give you one if you ask. Call 01322 343434 and ask for the Right to Buy & Leasehold Office.
Fill the form in carefully, as it is used to decide:
- whether you have the Right to Buy; and
- how much discount you are entitled to.When you have filled in the form, return it to the Council. It would be a good idea to use recorded delivery or to deliver it by hand and get a receipt; otherwise, you may be unable to prove that the Council has received the form. You should keep a copy of the completed form for yourself.
The Council’s Response
The Council must send you Form RTB2 telling you whether or not you have the Right to Buy within 4 weeks from the date on which the Council received your RTB1 form (or within 8 weeks if you have been a tenant of the Council for less than 2 years).
If the Council says that you don’t have the Right to Buy your home, it must explain why. It may be because your home is particularly suitable for occupation by elderly persons, taking into account its location, size, design, heating system and other features. Other exceptions to the Right to Buy are listed at the end of this leaflet.
The Council’s Section 125 Notice
If the Council has agreed to sell your home to you, it will arrange for a valuation of your home and the Council’s surveyor will contact you to arrange a convenient time to visit your home. The Council will then send you a separate Section 125 Notice which tells you the price you have to pay and any other terms and conditions of the sale.
The Council must send you this
within 8 weeks of the RTB2 form if your home is a house and you
are buying a freehold or within 12 weeks if your home is a flat
or maisonette. If you are buying a house on leasehold terms,
the time limit is also 12 weeks.
Appealing to the District Valuer
When you receive the Section 125 notice, you may feel that the valuation of your home is too high.
If you do, you can get an independent valuation from the District Valuer. To do this, you have to tell the Council, within 12 weeks of receiving the Section 125 notice, that you want a ‘determination of value’ under Section 128 of the Housing Act 1985.
You will then have another 4 weeks to put your case to the District Valuer. He will also need to inspect your home. The District Valuer’s valuation will be the one that counts. Even if it is higher than the Council’s valuation, you will still have to accept it or withdraw your application to buy your home.
Other
Questions about the Section 125 Notice
If there is anything else in the Section 125 notice you are not
sure about, you should contact the Council’s Right to Buy & Leasehold Office on 01322 343434. If you and the Council disagree about something, you have the right to go to the County Court for a ruling. But this can be expensive and you should get legal advice first.
Telling the Council what you want to do next
You now have to decide if you want to:
- buy your home;
- or forget about buying, withdraw your application, and carry on paying rent.
When you have decided, you must tell the Council in writing within 12 weeks of receiving your Section 125 notice. If you have asked to have your house valued by the District Valuer, you must tell the Council what you want to do within 12 weeks of getting that valuation.
If you do not let the Council know what you intend to do in time, it will send you a reminder. If you do not reply within 28 days, the Council will think you don’t want to buy, and your application will not be dealt with any further.
The Council cannot send you a warning notice until at least 3 months after your Section 125 notice.
If for any reason you are not able to decide within the time limit what you want to do, you should tell the Council. If you are unable to decide for a good reason (for example, if you were in hospital and you could not return the form in time), your time limit may then be extended.
You don’t have to buy your home just because you have told the Council you want to. You can still change your mind.
But if you do not tell the Council what you want to do, the Council will think you don’t want to buy, and you will have to start again. If the value of your home has gone up in the meantime, then you will have to pay the higher price.
Completing your purchase
If you are happy with the Council’s terms for selling your home to you, and you have arranged your mortgage, you are ready to go ahead and buy. You should tell the Council that you are ready, and ask your solicitor for advice on the legal documents and making your payment. It can take several months before you become the owner of your home.
Delays or problems with the sale
Most sales go through quickly, but sometimes there are problems or delays. If the Council does not send you Form RTB 2 or the Section 125 notice within the times specified above, you may be allowed a reduction in the purchase price.
To get this, you must complete Form RTB 6 and send it to the Council. You must give the Council at least one month to take the next step in the sale process.
The Council may send you a counter notice if it has already served you with a Response Notice or a Section 125 Notice, or if there is no action that can be taken by it to speed up the sale.
If the Council does not send you a counter notice within the time allowed, you can send the Council Form RTB 8. The rent you pay while the delay goes on will then be taken off the price you have to pay for your home. If the Council delays the sale again, you can repeat this procedure.
All these forms are available from the Council.
You should let the Council know as soon as you are ready to buy. If the Council doesn’t hear from you for a long time, it will write to you and ask you either to complete the purchase within 8 weeks or to tell the Council that you disagree with the terms of the sale.
If you don’t, the Council may send you a second notice asking you to complete your purchase. If you still don’t contact the Council or complete the sale, your application will not be taken any further.
Exceptions to the Right to Buy
The law says you do not have the Right to Buy if your home:
- is particularly suitable for occupation by elderly persons, taking into account its location, size, design, heating system and other features;
- was let to you or the previous tenant for occupation by a person aged 60 or over, whether they were the tenant or not; and
- was first let (to you or someone else) before 1 January 1990.
When considering if your home is ‘particularly suitable’, the Council must ignore features that you have provided (for example, a central heating system).
What if I don’t agree with the decision?
Contact the Residential Property Tribunal at 10 Alfred Place, London, WC1E 7LR, telephone number 0845 600 3178.
What happens then?
When both sides have had the chance to put their case and the facts have been established, the Residential Property Tribunal will decide whether or not your home is excluded from the Right to Buy. If the Residential Property Tribunal decides that your home is particularly suitable for occupation by elderly persons, you will not have the right to buy it.
If the decision is that your home is not particularly suitable for occupation by elderly persons, you will be able to go ahead with your purchase unless there is some other reason why you do not have the Right to Buy (see overleaf).
Other exceptions to the Right to Buy
Other exceptions to the Right to Buy are:
- Sheltered housing for the elderly, the physically disabled, the mentally ill or the mentally disabled. Special rules must be met in these cases.
- Houses and flats on land bought for development, and which are being used as temporary housing before the land is developed.
- The tenancies of employees who have to live in homes owned by their employers so that they can be near their work.
- The tenancies of employees whose home is inside the boundaries of a school, a social service home, another type of operational building or a cemetery.
- The tenancies of members of a police force whose homes have been provided free from rent and rates.
- The tenancies of fire authority employees who have to live near to the station they work in and whose homes have been provided by the employer.
- Temporary lettings (of up to 3 years) of homes usually let to the employees mentioned above.*
- Some homes which are let as part of business or agricultural premises (for example public houses, farms, shops).
- Homes which the Council has leased from someone else and which have to be given up empty when the owner wants them.
- Almshouses.
- Homes which are let by a charitable registered social Council, a charitable housing trust or association, by certain co-operative housing associations, or by a housing association or other registered social Council which has not received grants from public funds.
- Tenancies given to students so they can follow certain full-time courses at a university or college. This rule does not apply if the tenancy continues for more than 6 months after the tenant stops attending the course.*
- The tenancies of people moving into the area from another district to take up a job and given a home temporarily while they look for a permanent home. This rule does not apply if tenants are still living there after one year.*
- Tenancies for homeless people secured under section 193 of the Housing Act 1996.
- The tenancies of people who used to be squatters but have now been given a licence to occupy a home.
- Long fixed-term leases (of over 21 years).
- Temporary lettings to people who were not secure tenants in their previous homes which are being improved or repaired.
For exclusions marked * to count, the tenant must be notified before the start of the tenancy.
Homes due to be demolished
If the Council intends to demolish your home, it must serve you with a demolition notice and this will suspend the Right to Buy.
Defective dwellings
Certain types of houses and flats have been designated as defective under Part 16 of the Housing Act 1985, because:
- they are defective by reason of their design or construction; and
- their value has been reduced substantially because their defects have become generally known.
