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Mortgages, Protection and Insurance services

Oxford Mortgages

Right to buy:

Since the Housing Act 1980, tenants who have lived in a ‘right to buy’ property for a minimum of 5 years have a right to buy it at a substantial discount. This can be up to 60% and 70% of its value for a house or flat respectively. The discount is based on the number of years the tenant has been a council tenant.

As of July 21st 2014, the cap on the amount of discount for the ‘Right to Buy’ scheme in England is £77,000. The discount is calculated as follows: 35% after 5 years of residency and another 1% for each further year up to a maximum of £77,000, or £102,700 in London. From April 6, 2015 the maximum discount will increase annually by the percentage change in the Consumer Price Index (CPI).

You can visit this government run website to see if you are eligible under this scheme: http://righttobuy.communities.gov.uk/do-i-have-the-right-to-buy/

Should the individual subsequently sell the property, there are several rules that apply to how the property must be sold, and if applicable, any discount that would need to be repaid.

The discount to be repaid reduces each year the property is owned after purchase.

Year of ownership the property is sold
Percentage of discount to be repaid
Help to buy discount repayment
1st Year
2nd Year
3rd Year
4th Year
5th Year

The discount to be repaid is calculated on the sale not the purchase price.

E.g. Mr and Mrs Smith purchase their home at £200,000 and receive a 35% discount of £70,000. They then sell their property the same year for £240,000 10 months later. Therefore they are required to pay back 100% of the 35% discount back (35% of £240,000) £84,000.

Right to buy mortgage options:

There are a large number of mortgage providers that offer competitive products for a purchase of this nature. In some cases lenders will offer up to 100% of the ‘Right to Buy’ contracted price.

Of course as with any mortgage application approval is subject to the individual lenders underwriting requirements and the banks valuation of the property.

Do not hesitate to contact our office with any questions regarding any element of the Right to buy mortgage process.

Risk warning:

Your home may be repossessed if you do not keep up repayments on your mortgage.

Other things to consider 

  • You won’t be eligible for housing benefit if you become a homeowner. 
  • You may want income protection or life insurance in case anything happens to you while you’re paying back your loan or mortgage (some lenders require this). 
  • Always check costs upfront before signing anything. 
  • Remember the value of your home can go down as well as up.

Oxford Mortgages does not charge fees for mortgage advice; commission is received from the lender.