Buying your council property

You should calculate the total cost of buying a council house, including the price after the discount. Factor in your income, current debts, and living expenses to ensure the repayments are manageable. You must remember that repayment of the discount will be required if you sell the property within five years.

Your mortgage options will depend on your financial situation and creditworthiness. You will need to investigate different mortgage types and terms to find the one that fits your needs, considering factors like interest rates and the length of the loan. Typically, you’ll need to have a deposit prepared, often around 10% of the purchase price before discounts are applied. It is strongly recommended that you seek independent legal advice for assistance in this process.

Buying a home isn’t just about the purchase price. You must account for hidden costs such as legal fees, surveys (including structural surveys), stamp duty (if the purchase price is above a certain threshold), and potential repairs the property may need. Receiving financial advice could also come at a cost but can save you money in the long run by avoiding pitfalls.

When you consider the new rules for buying a council house, understanding the market value is critical because it greatly affects the discounts available to you. The market value determines how much you can potentially save off the full market price when exercising your Right to Buy.

Market fluctuations can greatly influence the market price of homes. As the market ebbs and flows, the value appraised might shift.

Before embarking on purchasing a council house, you must understand the critical legal elements and the nuances of ownership. This understanding will ensure you make informed decisions and appreciate your rights and obligations.

When you buy a council house, there are two types of ownership: leasehold and freehold. Leasehold means you own the property for a fixed term but not the land on which it stands. As leaseholders, your control over the property is subject to the terms of the lease, which include paying ground rent or service charges. It’s essential to review the terms of the lease and any associated costs that might accrue over time.

As well as their mortgage, leaseholders are responsible for paying:

• an annual service charge to the council for repairs to communal areas - this includes repairs to guttering, lifts, roofs, shared walkways and stairwells
• a share of the cost of any major repair or improvement works to the building containing their flat or maisonette – this includes things like re-roofing, new gutters, and replacement of lifts

On the other hand, freehold signifies that you own both the property and the land outright. This type of ownership grants you greater autonomy and typically involves fewer ongoing costs.

If you purchase your home under the Right to Buy scheme and you wish to resell or dispose of it within 10 years of the Right to Buy sale date, you must first offer it for sale to back to us at full market value. The market value must be agreed between the parties or, if we are unable to agree, you have the right to request for it to be determined by the District Valuer. If your offer has not been accepted within 8 weeks, you will be free to sell the property on the open market.

If you submit a First Refusal request, and we did wish to repurchase, we will require legally acquired vacant possession because any prospective council tenant must go through the formal lettings process.

The Right to Buy scheme offers you a discount on the market value of your council house, but there are important stipulations regarding the repayment of this discount. If you decide to sell the property within the first five years, you will have to repay some or all the discount.

The repayment amount is proportionate to the resale value of the property and decreases each year after the purchase as follows:

• Sell within the first year: You repay 100% of the discount.
• In the second year: You repay 80%.
• Third year: You repay 60%.
• Fourth year: You repay 40%.
• Fifth year: You repay 20%.

Should you sell after five years, the discount does not need to be repaid.

Example

If your home was valued at £125,000 at the time you purchased from us, and you received a discount of £50,000, that means that your discount was 40%.

If your home is valued at £160,000 when you wish to sell it, and you sell within the second year of purchase, you will have to repay an amount of the same percentage of the sale price. In this case, as the initial discount was 40%, and selling in the second year required four fifths of the discount to be paid back, the amount needing to be paid would be four fifths of 40% of £160,000, which is four fifths of £64,000, or £51,200.

On a calculator this would be £160,000 times 40% times 80% equals £51,200 to repay.

It’s essential you seek independent legal advice to navigate these terms correctly, ensuring you understand your legal ownership and the financial implications should you choose to sell the property.

Once you’ve completed the purchase of your council home, it’s imperative that you’re prepared to manage the responsibilities of property maintenance and understand your newly gained position on the property ladder.

After purchasing a council home, it becomes your duty to maintain the property. This involves routine repairs and upkeep to ensure the home remains safe and comfortable to live in. You must stay on top of:

• Regular checksof critical systems (heating, plumbing, electrical)
• Seasonal maintenance, such as gutter cleaning and garden care
• Prompt repairsto any damage or wear and tear

It’s worthwhile to set aside a budget for these tasks, as failing to maintain the property can lead to more costly issues down the line.

Joining the property ladder as a homeowner is a momentous step. You’re now part of a group that has invested in the stability and future potential that comes with home ownership. Here’s what you need to keep in mind:

• Building equity: Over time, as you pay off the mortgage, you accumulate equity in our home.
• Market value changes: Keep an eye on the property market, as the value of our home can fluctuate,

Section 121AA of the Housing Act 1985 says that landlords must provide their Secure tenants with information about the Right to Buy. This document gives you the required information. 

If you are not able to access the information provided in the online links included in this document, you can talk to a Right to Buy Agent on telephone number: 0300 123 0913 or email enquiry@righttobuyagent.org.uk; or you can contact the council’s Right to Buy team: email: House.sales@leeds.gov.uk or telephone: 0113 378 5685

When you can buy your home under the Right to Buy

You can apply for the Right to Buy scheme if you are a secure tenant of Leeds City Council and you:

• live in a house, bungalow, flat or maisonette which the council owns or on which it holds an appropriate lease
• are purchasing either in your sole name; or jointly with other people named on the secure tenancy. On a joint tenancy, the Right to Buy belongs to all tenants so you can either buy jointly; or individually where the other tenants agree to this
• occupy the property as your only or principal home
• have the minimum qualifying tenancy period of 3 years public sector tenancy. The 3-year period does not have to be consecutive and can include your current tenancy and any previous public sector tenancy

Reasons why you might not be able to buy the property

• if you or someone you hold the tenancy with is subject to an order of the court for possession of the property
• if you or someone who is joining in the Right to Buy with you:
  1. is subject to a bankruptcy order
  2. has a bankruptcy petition pending
  3. is an undischarged bankrupt
  4. has arranged with a creditor the terms of which remain unfulfilled, including County Court Judgements
  5. benefits from a moratorium period under a debt relief order
  6. is subject to a suspension period under an order made under section 121A of the Housing Act 1985 due to anti-social behaviour

Other reasons why you might not be able to take up the Right to Buy

The Right to Buy does not arise in certain circumstances, including:

• where the landlord is a trust or certain type of housing association
• where the landlord does not own the freehold and the remaining lease is:
  1. 21 years or less if your home is a house/bungalow; or
  2. 50 years or less if it is a flat/maisonette
  3. In both cases, this relates to the date when the tenant serves the RTB1 (application form)
• where the property is within the boundaries of a building held by the landlord for purposes other than housing and was let to the tenant (or a predecessor) for the purposes of employment
• where the property is let for the purpose of housing disabled persons or elderly persons or persons with a mental disorder; and has substantially different features to ordinary dwellings
• where the property is held by the landlord on a tenancy from the Crown
• where a final demolition notice is in place

You can find a full list of the exceptions to the Right to Buy in Schedule 5 of the Housing Act 1985.

How the sale price is calculated

The price you will pay for your home is based on:

• the market valuation of your property which we will arrange to be carried out free of charge
• how long you have been a tenant in your current home and any previous public sector tenancies you have claimed that can be confirmed
• the cost to the council of buying or building your property - if any work was done in the last 30 years, the cost of this work may reduce your discount
• previous Right to Buy purchases – you are only entitled to one Right to Buy discount in total so previous discounts given will be deducted from any discount you may currently be entitled to receive

If you want further information about the Right to Buy, you can contact a Right to Buy Agent: 0300 123 0913 or emailing enquiry@righttobuyagent.org.uk; or you can contact the council’s Right to Buy team: Email: House.sales@leeds.gov.uk or telephone: 0113 378 5685

How to take up your Right to Buy

To exercise your claim to buy your property under the Right to Buy, you will need to complete the application form (RTB1) and send it to Home Ownership Team, 4th Floor East, Merrion House, Woodhouse Lane, Leeds, LS2 8BB. The application form and more information about applying can be found on GOV.UK. You can also get more details from the Right to Buy Agents by emailing enquiry@righttobuyagent.org.uk.

The date on which we receive your application is called the relevant date. This is the date the council will use to workout the value of your home and your discount entitlement. If the value of your property changes while your application is being processed, for the purposes of the Right to Buy the value will remain the same as it was on the relevant date. Your discount entitlement will also be set at the relevant date and does not change during the application process. 

You can cancel your application at any time. The council will not charge you for this, but your solicitor and your mortgage provider may charge you for any services they have provided up to the date that you let them know that you are not going ahead with the Right to Buy.

If you delay the Right to Buy application process, the council can serve a formal notice where:

• you have not responded to the formal offer letter within the 12-week notice period; or
• you have not taken steps to complete the purchase within a reasonable period of time – the reasonable period cannot be less than 3 months after the formal offer letter is sent to you.

If you do not meet the timescales set out in the formal notice, the council can end your Right to Buy application.
If the council delays your Right to Buy application, you can:

• send an Initial Notice of Delay (RTB6) which requires the council to rectify the delay within a given response period – you cannot give the landlord less than a calendar month to respond.
• send an Operative Notice of Delay (RTB8) – you can only do this if the council does not rectify the delay within the response period allowed by the RTB6 or serve a counter-notice. You may be entitled to a reduced purchase price if a valid RTB8 is received by the council.

You can ask the council to provide you with the delay forms. You can also download the forms from GOV.UK. You may want to send the delay notice by recorded delivery; or hand deliver it and obtain a receipt from the council as the notice is only effective once the council has received it. You can only use the delay procedure while a delay is occurring. Once the delay has ended you cannot serve delay notices.

Remember

1. You will not be eligible for housing benefit if you become a homeowner.
2. The value of your home can go down as well as up.
3. If you do not keep up with your mortgage payments, your lender may take possession of your home.

Costs of owning your home

There will be initial costs for taking up your Right to Buy. These costs vary but may include:

• Stamp Duty - you can find out more about Stamp Duty on GOV.UK, Stamp Duty is calculated on the actual purchase price of the home, so market value minus Right to Buy discount.
• Legal fees – a fee will be payable if you use a solicitor or other legal representative to help you with buying your home
• Land registry fees – you can find more information about land registry fees on GOV.UK.
• Mortgage fees – these can include:
  1. a fee if you use a broker to help you find a mortgage
  2. an arrangement fee to fix a mortgage rate with your mortgage lender
  3. a fee for your lender’s assessment of the market value of your property
  4. a survey fee for a professional inspection of your property (this is different from the assessment of market value undertaken by your mortgage lender). There are different types of survey with different costs depending on how detailed the survey is.

As a homeowner you will also have regular ongoing costs. These can include payments for:

• a mortgage or loan on your property
• building insurance
• contents insurance
• life insurance
• mortgage payment protection insurance
• Council Tax
• water, gas, electricity, broadband and other services
• repairing and maintaining your property
• service charges – you can find more information on the Lease Advice website.