Executing your right to buy in the UK

Back in the 1980s the then conservative government introduced the right to buy scheme, this was to allow those that had lived in public / social housing the ability to get on the housing ladder by allowing tenants the ability to purchase their homes at a lower than market rate. 

This is still available in a lot of local authority areas, you generally have to hit multiple stipulations such as tenancy length, earnings etc 

The problem is not all mortgage providers offer the right to buy as a lot of applicants are on a lower wage than the national average.

This is where specialist right to buy lenders are a better way to go, advisors that specialise in these types of mortgages understand the circumstances that lower income workers and those within social housing are living in.

Example of right to buy reductions

 

When you are given your social housing contract it will generally have details about what your deductions and payments will be below is an example 

Example

Standard or market value of a property: GBP 260,000
Maximum discount (equivalent to a deposit): GBP 100,000
Purchase price: GBP 160,000

This generally shows that once you have hit the requisites of the tenancy agreement usually around the 5-7 year time period you would be looking for a mortgage of £160k which is a much lower amount than what the market value of your property actually is. 

This allows you to purchase a property with a market capital value much higher than you generally would be able to. 

Although the example above is generic depending on your LA (Local Authority) rules and guidelines you may get a larger or smaller discount and the requirements that you need to reach could be more or less than those detailed above. 

Some LA (Local Authorities) also offer the ability to do a rent to buy scheme which will allow you to do some part buy part rent where you own a percentage of the property as well.

Conclusion

If you are entitled to execute your right to buy you should always look into specific and specialist advice from a company that deals with this type of mortgage there can be specific details within the contract that a day to day mortgage broker / financial advisor may not be aware of. 

But as always you should do  your research into any and all companies that you are dealing with and always make sure that they are either accredited or are a member of the financial conduct authority this then makes sure that you are protected to the full extent of the law and also means that all the people that you deal with have been rigorously trained and assessed within the financial sector

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