Thousands of housing association tenants in the Midlands have been offered the opportunity to buy their homes at a discounted price using Right to Buy – but those who don’t move quickly could miss out.
Of the 9,000 tenants who applied to the Right to Buy pilot scheme launched by the government in August, 6,000 have been informed that their applications have been successful.
That doesn’t necessarily mean they’ll be able to buy their home, however, as the government has confirmed to Which? that it only expects its £200m funding to stretch to around 3,000 sales.
Right to Buy: how it works
Right to Buy was launched in its original form in 1980 to give council housing tenants the opportunity to buy their homes at a discount.
In recent years, the government has said it will extend the scheme to housing association tenants, and has now put £200m of funding behind a pilot in the Midlands.
How much tenants can save by using Right to Buy depends on the type of property they’re buying and how long they’ve lived there.
- Houses: After three years, tenants can get a 35% discount on the market rate. After five years, this increases by 1% each year up to a maximum of 70%.
- Flats: After three years, tenants can get a 50% discount on the market rate. After five years, this increases by 2% each year up to a maximum of 70%.
Find out more: our full guide on Right to Buy explains how the scheme works, including discounts, eligibility criteria and mortgages
6,000 successful applicants, 3,000 buyers
The government’s Right to Buy pilot for housing association tenants launched in mid-August, with tenants from qualifying housing associations given a month to apply.
By the end of this window, 9,000 tenants from 45 different housing associations had applied to buy their homes. Now, 6,000 have been drawn out of the ballot and given unique reference numbers (URN) to buy their home.
There are concerns, however, that many of the ‘successful’ tenants won’t actually be able to buy their home due to the pilot’s £200m funding limit.
When Which? asked the government whether its funding would go far enough, it confirmed that it expects the pilot budget to fund ‘around 3,000’ Right to Buy sales – meaning that theoretically half of the successful applicants could miss out.
But it’s unlikely all tenants will proceed with their purchase – and there’s a range of factors that could stop them.
First of all, housing associations can keep back some properties from use in the scheme, so some applicants may find their home is ineligible.
If a home isn’t eligible, the housing association will have to offer the tenant a ‘portable discount’ on an equivalent property, but there some tenants may not want to leave their long-term homes.
Secondly, those using Right to Buy will need to get a mortgage to buy their property, and thus go through the same credit checks and affordability tests faced by other home buyers.
Right to Buy ballot: next steps
Applicants selected in the ballot need to take the following steps to buy their home:
- Within four weeks, tenants must inform their housing association that they intend to buy their property with their URN.
- The landlord will then confirm whether the home is eligible (or offer a portable discount).
- The buyer will be provided with confirmation of their discount.
- The buyer will need to apply for a mortgage.
- All purchases must be complete by Spring 2020.
Will Right to Buy be rolled out across the UK?
The government originally announced plans to extend Right to Buy to housing association tenants in October 2015, so it’s taken three years for the pilot to get underway.
At the time, then-Prime Minister David Cameron said ‘the first tenants can start to buy their homes from next year’ (meaning 2016), but since then the timescale has repeatedly been extended.
Recently, housing minister Kit Malthouse described the pilot as ‘the first step in helping housing association tenants’, but reaffirmed that the government ‘will conduct a full evaluation of the pilot after it finishes’.
That means that at the very earliest, the government will evaluate the pilot in mid to late 2020, so should any Right to Buy extension happen, it’s unlikely to take place until at least 2021.