Quick navigation
Under the UK’s right to buy scheme, councils can sell properties that they owned for private ownership. If you own one of these homes and would like to sell it, there are some crucial steps that you should learn about this process, including possible financial consequences. But getting a competitive and quick offer from a buyer is still achievable when you sell.
- What are right to buy properties?
- Advantages to buyers of owning a right to buy home
- Possible drawbacks of a right to buy flat or house
- Potential payback implications of selling a right to buy property
- Your options to sell a right to buy house or flat
- Top questions and answers about selling a right to buy home
What are right to buy properties?
More than two million homes in the UK have been sold under what’s known as the “right to buy” scheme created by the government, which allows people who are tenants in council houses to apply for buying the properties at a discounted rate compared to their market value.
There are unique rules and limits on right to buy in England, Scotland, Wales and Northern Ireland, as the UK Government website explains in a guide to the scheme. So this guide will primarily refer to properties located in England.
Right to buy as a general policy was first made law by the government in the 1980s and since then the program has been updated, with its most current version including a law known as the Housing and Planning Bill 2016 extending the reach of the scheme to tenants of housing associations, with the aim of getting more renters to become property owners.
Someone living in a council house or flat in England can purchase if is their sole home, that their landlord was public sector – meaning a council, NHS trust or housing association – and that the property is self-contained, among other requirements on debt issues and more.
In London, you can get up to a 70 percent discount or £136,400 off the price of a home, whichever is lower, and elsewhere in England the price cap drops to £102,400 or 70 percent.
Whether you’ve owned your right to buy home for a short amount of time or many years, you may now be looking to sell for a number of reasons – perhaps you are experiencing financial difficulty, dealing with a divorce, are expecting a child or many other scenarios. Whatever the reason behind the sale, this guide will help you learn about how to best find a buyer.
This advice includes important insights into the pros and cons that buyers might associate with this type of property, potential fees you might owe the local authority when selling, and also tips on which selling strategies have the best chance of resulting in a fair and speedy offer.
Advantages to buyers of owning a right to buy home
When you are looking to sell any type of right to buy property, one useful step can be discovering the possible advantages that buyers may view these homes as having.
Knowing the various pros in favour of owning a right to buy house or flat can assist with the selling process because you can emphasise these factors when talking to prospective buyers about your home, which may help with encouraging them to make you an offer.
Great location: No matter where a property is situated in the UK, it’s often said that the specific location of a house or flat can be the determining factor in whether someone wants to make an offer on it. If your right to buy home is in an area that is in high demand from buyers because of its access to amenities and other features then this could make it easier to get an offer.
High demand: A recent news report from MSN says that one in four right to buy homes are now in private ownership since the launch of the scheme roughly 40 years ago, with many being turned into rental properties. This suggests ongoing high demand for right to buy homes, particularly if you have a would-be landlord interested in your property.
Possible drawbacks of a right to buy flat or house
As well as the several potential benefits that buyers might associate with a right to buy home, these properties can also have features that make them less attractive to certain people.
It’s equally important to be educated about these possible disadvantages as well as the advantages because this might help you to understand why your house or flat might be struggling to attract offers. Unfortunately, not all of these negative aspects are within your control but that does not mean that you will never be able to sell your property – and more than two million right to buy homes have been sold, as the HomeOwners Alliance notes, which underscores that there is an ongoing demand from a wide range of buyers for this type of home.
As detailed later in this guide, you still have options for selling fast and for a competitive offer, such as getting in touch with a no-commission quick buyer like LDN Properties.
Potential stigma: For certain buyers they might associate some negative stigma with former council-owned properties regardless of the type of home that is up for sale. This could be enough of a factor to discourage someone from making an offer, but won’t be an issue if you sell to a quick buyer because they will never use this as a reason to not want to buy a property.
Structural problems: In the event that your home has some significant structural damage, which can range from subsidence or damp through to extensive issues like the building being derelict, this can make it much harder to attract buyers, so you’ll need to think about whether to fix the flaw before selling.
Potential payback implications of selling a right to buy property
Another important consideration when preparing to sell your right to buy home is that you might end up owing the council some money, depending on how long you have owned the property.
As Shelter’s website explains, the obligation to repay the discount – and how much you have to pay back – will be case-specific to the sale of your property, and this is not a requirement that will apply every time a right to buy home is resold.
If you bought your council home before January 18, 2005, using the right to buy scheme and you are trying to sell it within the first year of buying it, you will have to repay the full discount. This drops to paying two-thirds of the discount in year two, and one-third in year three. If you have owned the home for more than three years then you don’t need to repay any discount.
For those homeowners who bought their right to buy home after January 18, 2005, then all or part of the discount will need to be repaid if you are attempting to sell the home within the first years of owning it. And the discount will be calculated based on the market price of the house or flat at the time that you are able to sell it, rather than the original purchase price.
If you sell in the first year of ownership then you will have to repay the full discount, dropping to four-fifths of the discount in the second year, three-fifths of the discount in the third year, two-fifths of the discount in the fourth year and one-fifth of the discount in the fifth year. If you sell your property in the sixth year or later then you will not have to repay any of the discount.
Understanding the possible discount payback that you might be liable for is a vital part of planning for the sale of your property, particularly if you’re aiming to keep costs low. For example, if you bought a home after January 18, 2005, and are close to reaching your sixth year of ownership you might want to wait until then to sell in order to avoid any payback requirement.
Your options to sell a right to buy house or flat
When you are at the stage of being able to look for a buyer for your right to buy property, you will have to make the important decision about which of four ways you would like to sell, whether that’s to a quick buyer, with an auctioneer, with an estate agent or on your own.
One way to help find out the best approach for your individual situation is to write down your top aims with selling, such as how long you are prepared to wait to find a buyer, the ideal price at which you would like to sell your home and whether you are open to paying commission. Then compare these facts against the details of the four choices below to find the best match.
You will discover that some of the methods have notable drawbacks, like having to pay potentially costly fees if you sell via an auctioneer or an estate agent. Other strategies have strong benefits, like selling within a few weeks when you contact a quick home buyer.
Selling to a quick buyer
Selling with an auctioneer
Auctioneers handle many of the tasks needed to sell a right to buy home, beginning with creating a listing that features photographs of the inside and outside of the property and describes its main elements, which they will then advertise to get buyers interested. Then they will host the auction and oversee the completion of a successful sale.
This can be a lengthy process for selling, including a wait of several weeks or months between the day that you choose to sell this way and the day on which the auction happens. If you property does manage to sell at the auction, the buyer will then have about 28 days to sign all the legal papers and finish the other necessary steps to finalise the purchase.
You will also have to pay commission if you choose to sell this way, and this will boost your expenses because the fee is subtracted from the eventual sale proceeds.
Remember also that there is no guarantee that your home will attract any bids during the auction, which would mean it remains unsold. This would then require that you start over with trying to find a buyer, possibly adding many more months to the selling schedule.
Selling with an estate agent
Or you could try selling your property through an estate agent, which is another way to avoid doing much work. That’s because the estate agent will produce and advertise a listing, schedule viewings, hear offers from buyers and hopefully guide one to the exchange of contracts.
Expect the timeline for selling this way to take many months, if not more than a year. And someone can make a legitimate offer but then rescind it, causing the sale to fall apart. They are able to do this without the risk of facing any penalties if contracts are not yet exchanged. And you’ll have to begin again with seeking a buyer, delaying a sale even longer.
If an estate agent manages to sell your home then you will have to pay them commission, and this is often charged within a range between 1.15 percent and 1.40 percent of your property’s final sale price. This fee will be deducted from the sale proceeds, adding to your costs. If you are trying to reduce expenses when selling then a no-fee buyer can be a great option.
Some estate agents might quote a high price for selling your right to buy home even if they understand that you will only be able to attract offers at a much lower value. The reason why estate agents do this is to try to convince you to sell using their services, because they will profit from the commission that they can charge you if they find a buyer for your property.
You can prevent falling for this estate agent trick by visiting a number of property sales websites and writing down the present and past sale prices of right to buy homes like yours in the same neighbourhood. Then ask multiple estate agents to give you a free quote of the price at which they think your home will sell. Finally calculate the average of all these values and this should give you a much better rough estimate of the price at which your home might be able to sell.
Selling on your own
Yet another option for selling a right to buy house or flat is doing so without any help, which puts the onus on you to complete all of the steps of selling, from the initial production and advertising of a listing through to organising viewings, hearing offers and finally exchanging contracts.
This method of selling shares a problem of using an estate agent, in that someone can make an honest offer to buy your home but then change their mind and cancel the offer, causing the sale to collapse. They can do this without any penalty if you have not already exchanged contracts. And you will have to start over with seeking a buyer, delaying your ability to sell even further.
It’s also a very time-consuming and stressful way to sell a property and you should plan on waiting at least a year before you are able to get a serious offer. Even then, the person making the offer can make the sale collapse by withdrawing the offer, which they can do without penalty if you have not yet exchanged contracts. This would inevitably extend your overall selling schedule by many weeks or months as you will need to start again with looking for a buyer.
The only clear advantage of selling without any fee-charging third-party help is that you would not have to pay anyone commission if you are able to sell your property, which lowers your total expenses. But this initial saving could be wiped out by the funds that you may have to spend on the various other actions needed to sell a property, such as advertising your home’s listing.
As an alternative, think about selling your house or flat to a zero-commission quick home buyer such as LDN Properties. Not only would you achieve the same goal of avoiding having to pay any fees when selling your home but you will also enjoy the additional advantage of being able to complete the sale of the property within a handful of weeks – and that schedule covers exchanging contracts and paying you the full proceeds from the sale.
Top queries and answers about selling a Right to Buy Property
LDN Properties has plenty of experience with buying right to buy houses and flats, and here you can read our responses to common queries we get about selling this type of home.
Your top questions when selling a Right to Buy property
The UK government in the 1980s enacted a law that created the ability for tenants in council flats and houses to purchase their properties at a significantly discounted rate, designed as a way to try and get more people to become homeowners. The program is still in effect but has been revamped over the years, with more than two million properties sold through it.
Perhaps the main reason explaining why someone could be interested in purchasing your right to buy flat or house is if it situated in an area that has very high demand from prospective buyers, for example if it is in a busy city centre, has great amenities and other benefits. There is ongoing high demand for right to buy homes, so you will be able to find a buyer for yours.
There are a handful of reasons that explain why it might be somewhat harder to sell your right to buy property, and one of these reasons could be if your home has some type of large-scale structural damage that is unresolved. Another potential drawback of this type of property is that some buyers might view former council homes as having a stigma and lose interest as a result.
If you bought your house or flat through a local authority’s right to buy scheme then you might have to repay all or part of the discount that you received from the property’s sale price, depending on when you bought it and when you attempt to sell it. Note that the longer you have owned the home, the less discount you may have to pay back – and possibly nothing at all.
Generally, you should be able to choose among selling to a no-fee quick home buying company such as LDN Properties, trying your luck with a property auction, selling using the services of an estate agent or selling without any help from a third-party. You will find that all four of these choices have their own pros and cons that will vary based on your unique selling needs.
Expect the selling process to take just a few short weeks if you use a quick buyer like LDN Properties, and this covers the time taken for the final important steps of exchanging contracts and paying you the sale proceeds. By contrast, it can take at least several months if not longer to find a buyer when selling via an estate agent, an auctioneer or without any assistance.
If you sell your home using the services of an auctioneer then they will typically charge you commission at 2.5 percent of your property’s sale price, whereas estate agents charge the fee within a usual range between 1.15 percent and 1.40 percent of the home’s sale price. But selling to a no-fee quick buyer or on your own means you will avoid having to pay commission.
