You’ll often hear the Right to Buy scheme mentioned by talking heads as it has been around since the 1970s, but you may not know exactly what it is, and what the difference is between Right to Buy; Right to Acquire and Preserved Right to Buy – find out below.
What the terms mean
In a nutshell, the Right to Buy scheme gives tenants of council housing the option to buy the property they live in; Right to Acquire gives housing association tenants a discount on buying the property they live in; and Preserved Right to Buy gives tenants whose council house has been sold the option to buy the property they live in. All three schemes only apply in England.
How much of a discount do I get?
If you are eligible for the Right to Buy or Preserved Right to Buy schemes, you may be able to buy your home at a discount of up to £80,900 (£108,000 in London). The discount is not a flat rate – there’s a sliding scale where tenants who have been in their home longer get a larger discount off the purchase price. You may also not get as much (or any) discount if your home has recently been improved or renovated. As a result, it’s essential to check exactly how much you would need to pay to purchase your home and whether you would be able to get a mortgage to cover any shortfall between your savings and the cost.
The Right to Acquire scheme allows tenants living in certain housing association properties in England to buy the house or flat they live in at a discount of £9-16,000. The discount varies by region.
Is buying my home worth it?
Buying your own home can be a way to stop paying rent and start building up equity – by paying off a mortgage you effectively own more and more of the property, so when you come to sell you will hopefully have a good lump of cash coming your way to spend on, e.g. a larger property or perhaps retirement. However, if house prices fall for your property (e.g. if it is flooded); in your area (for example, if a major local employer shuts down); or across the UK (perhaps as a result of Brexit) then you could wind up owing more money than your home is worth. It’s also important to remember that interest rates can and will change – at the time of writing, they are fairly low compared to 10 or 20 years ago. This suggests that they will rise over time, which will make mortgage repayment rates higher. Owning your own home can be a fantastic investment, but only if done wisely so don’t be overwhelmed by the headline discount – look for the hard facts!