The short answer is yes, and even better, buying your council house is made far more accessible due to a lesser-known government scheme. It’s called the Right to Buy Scheme, and it offers a massive discounted price of up to 70% of the home’s market value for long-term tenants. The significant discount isn’t the only generous aspect – what you must do to qualify is too.
“Can I buy my council house while on benefits” is a question we often receive here at When the Bank Says No, so we’ve put together this article to outline the answer in full detail, including what the Right to Buy Scheme is, how to qualify, and to give you the tools you need to build a roadmap to climbing the property ladder.
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Do I qualify for the Right to Buy Scheme?
This government scheme was put in place to provide an avenue for council tenants to become property owners, regardless of whether they are on housing benefits, allowing them to massively boost their assets and teach personal investment skills in the process. By transferring council properties to tenants, they also reduce expenses for the public sector whilst stimulating the private market.
To qualify, you must meet the following conditions:
- Three-year public sector tenant – You must have rented as a public sector tenant for three years. These years only have to tally up in total across all council houses, meaning the three years can be spent non-consecutively and across different properties.
- Secure council tenant – You must be a secure tenant in your council house, meaning you have a long-term tenancy agreement giving you renting rights and protection from eviction without valid reasons.
- Must be your only or main home – The council house you’re currently staying in must be your main residence.
- Property must be self-contained – The home must have its own bathroom, kitchen and front door.
- Property not earmarked for demolition or regeneration – There must be NO formal plans in place to demolish or redevelop the home, meaning there are no official documents and consultation records in place.
- No issues with the public sector landlord – You must not be in the middle of eviction proceedings, serious rent arrears or legal disputes with your landlord.
- No active bankruptcy or debt arrangements – You cannot buy your council house if you are declared or subject to bankruptcy, or have an individual voluntary arrangement.
Can I buy a council house after leaving?
No. The scheme is only eligible for currently secure tenants, and only for the property they are residing in. Former local authority tenants do not apply until they move into another council house.
How much is the Right to Buy Scheme’s discounted price?
The purchase price for eligible council tenants is dictated by several factors:
- Tenancy agreement length – The discount amount is based on a percentage and how long you’ve been a tenant. Both go up to a maximum discount of 70%.
- Houses – For houses, the discount is at 35% for three years, increasing by 1% for each extra full year.
- Flats – For flats, the discount is 50% for three years, increasing by 2% for each extra year.
- Current property value – The discount is applied against the property’s market value at the time of application, regardless of how much it cost in the past.
- Regional cash cap – There is a cap on how much the discounted price can add up to, £96,000 for all of England outside of London, and £127,900 for London boroughs.
What mortgage lender can I use to buy my council house?
Being on housing benefits or any other form of government assistance doesn’t change your available pool of mortgage lenders in theory.
In practice, though, mortgage lenders may take issue with the fact that you are on benefits. Your options are:
- High street mortgage lenders – If you claim housing benefits, universal credit and additional income streams are considered when assessing mortgage applications from council tenants.
- Specialist lenders – Mortgage brokers can get you access to specialist lenders who focus on helping secure council tenants through the government scheme.
When the Bank Says No has access to a network of specialist lenders who are not available through normal search methods. Contact us today, and we can set you up with a mortgage lender perfect for you.
What should I know about looking for mortgage lenders whilst on benefits?
The following are some things to consider when looking for a mortgage deal:
- Financial situation – They will want to assess your full income, and some benefits will not carry over upon receipt of ownership.
- Housing cost payments – These payments are meant to help pay rent, but they will be deducted once you buy a council house.
- Significant financial commitment – Going from a renter to a homeowner means having to pay for maintenance costs, solicitor fees and any other ongoing costs.
- Careful planning – You must show that you have a plan for handling all mortgage costs involved. This means not only having future income stability, but also demonstrating having enough breathing room so that paying mortgage payments is sustainable and achievable.
- Seek guidance – You should speak to a financial advisor or a mortgage broker, so they can point you in the direction of lenders who understand standard Right to Buy rules.
Conclusion – Can I buy my council house while on benefits?
The answer is yes, and the longer you are a council tenant, the easier it will get. This gives you a lot of leeway in your long-term planning. When the Bank Says No are expert mortgage brokers that can help with achieving a dream mortgage deal. If you are looking to buy your council house while on benefits, contact us for more details on your available options.
FAQ – Are housing association tenants eligible?
Housing association tenants typically are not included in the eligibility criteria for the government scheme, except for two situations:
- Preserved right to buy – If you were a secure tenant, you can still buy a council home with the discount. This has nothing to do with your housing association tenancy, though.
- Voluntary right to buy scheme – Some housing association homes are available for purchase under the voluntary right to buy pilot schemes. This is limited, however.
FAQ – Are there restrictions after purchase via the scheme?
Certain restrictions apply when purchasing under the scheme:
- Discount repayment – If you sell your council home within five years, you must repay some or all of the reduced cost:
- First year – 100%.
- Second year – 80%.
- Third year – 60%.
- Fourth year – 40%.
- Fifth year – 20%.
- First refusal to the council – If you choose to sell within the first ten years, you must offer the property back to the council or another social landlord for its market value.
- Leasehold flats – Buying your council flat means you usually become a leaseholder, paying the ongoing service charges and ground rent.
- Restrictions on renting – You can rent out the property after buying it, but you must notify the council or get permission if required under the lease.
These are set by either your local authority or the Department for Work and Pensions (DWP).
FAQ – How does council housing work?
To apply for a council home, you need to go through your local council. If your application is accepted, you’ll be put on a waiting list.
This list includes other accepted applicants in need of a council home. Your local council will then prioritise applicants based on who needs a home the most urgently.
When your name reaches the top of the list, you’ll be provided with a home, which you can rent for a maximum of five years, which can be renewed, in most cases, after this term is up.
FAQ – Who qualifies for council housing?
As long as you have less than £16,000 in savings, you qualify for council housing. Otherwise, local councils won’t even consider you as a potential applicant. You can apply for council housing if you meet one or more of the criteria listed below. These conditions are referred to as eligibility rules. Still, each council has its list of local rules and regulations regarding who can apply.
Nevertheless, there are certain conditions as to who can qualify, which all local councils need to adhere to, such as the following:
- You’re legally considered homeless
- Your family falls into the low-income category
- You’re living in extremely dire or overcrowded housing conditions
- You need to move because of a medical reason or disability
- You have less than £16,000 in savings
- You have a local connection to the area, such as family or a steady job
FAQ – How can I apply for the Right to Buy scheme?
Follow these four steps to help you purchase your council house:
- Fill in an RTB1 application form.
- Send the completed RTB1 form to your landlord (Local Council or NHS Trust) by recorded delivery to ensure that your landlord receives it.
- If your landlord is ready to sell, they need to send you an offer. This offer should include:
- The selling price of the property and how they worked it out
- A brief description of the property
- The level of discount you’re eligible for
- An average of service charges for the coming five years
- Any potential structural problems with the property
FAQ – Is there a Right to Buy in Scotland, Wales, and Northern Ireland?
Yes, the Right to Buy homeownership scheme is also available in these countries. Yet, each follows different rules and regulations.
For example, in Scotland, it’s known as the Right to Acquire initiative. Under this scheme, tenants can apply to purchase their home at a discount after they’ve been renting it from a public sector landlord for at least five years.
In Wales, it’s called the Preserved Right to Buy, and in Northern Ireland, it’s called the Choice Based Lettings. Both schemes follow the same regulations as Scotland.
FAQ – Do Armed Forces Veterans qualify for Council Housing?
During their time serving with the Armed Forces, all personnel are provided with high-quality subsidised accommodation at their place of work or close by. Yet, once it’s time for them to leave, they need to begin searching for civilian housing options. If they have less than £16,000 in savings, this means they qualify for social housing.
However, it’s worth noting that councils have long waiting lists, and it could be years before you get a house. In the meantime, there’s very little your local council can do for you in terms of accommodation.
They do, however, have an obligation to provide you with temporary housing if you have no place to go and you’ll be left out on the street.
After you get a council house, the same rules apply to you in terms of purchasing the property under the Right to Buy scheme after renting for 3 years.